Four Lakes Re Ltd. (Series 2025-1)

This Four Lakes Re Series 2025-1 catastrophe bond is being sponsored by US insurer American Family Mutual Insurance Company and it is the eighth we have listed in our Deal Directory from the insurer.

It will become the sixth catastrophe bond in the Four Lakes Re series from the company, with one issuance now sponsored every year since 2020.

For its newest cat bond, American Family Insurance is utilising its Bermuda-domiciled special purpose insurer (SPI) named Four Lakes Re Ltd., with the vehicle offering two tranches of Series 2025-1 notes to investors, we are told.

AmFam is aiming to secure $150 million or more in multi-peril US catastrophe reinsurance protection through this new cat bond.

The reinsurance will protect the insurer and its subsidiaries against losses caused by US named storm, earthquake, severe thunderstorm, winter storm and wildfire events, which is the same group of perils covered by its previous three Four Lakes Re cat bond issuances, we understand.

This Four Lakes Re Series 2025-1 issuance of cat bond notes will provide AmFam with three calendar year’s of reinsurance, on an indemnity trigger and per-occurrence basis, running from January 2026 to the end of December 2028.

A currently $50 million tranche of Series 2025-1 Class A notes will have an attachment point at $2.7 billion of losses and will cover a share up to $3.375 billion, giving them an initial attachment probability of 1.12%, an initial expected loss of 0.85% and these notes are being offered to investors with price guidance for a risk interest spread in a range from 3.75% to 4.5%, sources said.

A targeted $100 million Class B tranche of notes are riskier, attaching lower down at $1.6 billion of losses, covering a share up to exhaustion at $2.1 billion, coming with an initial attachment probability of 3.94%, an initial expected loss of 2.91% and these notes have risk interest spread price guidance in a range from 6.5% to 7.5%, it is said.

Update 1:

We are told that American Family Mutual Insurance’s target for its latest Four Lakes Re Series 2025-1 catastrophe bond issuance has been increased, with now $200 million of reinsurance protection sought from this deal.

At the time the price guidance has been lowered for each tranche of notes.

The Class A notes are now targeted to be $75 million, while their price guidance is now 3.25% to 3.75%.

The Class B notes are now targeted to be $125 million, while their price guidance has been updated to 6% to 6.5%.

Update 2:

American Family Mutual Insurance secured its upsized target for $200 million of reinsurance protection from its latest Four Lakes Re Series 2025-1 catastrophe bond issuance, while the notes priced at the bottom of reduced guidance.

The Class A notes were finalised to provide $75 million of protection and priced to pay investors a risk interest spread of 3.25%.

The Class B notes were finalised to provide $125 million of protection and priced to pay investors a risk interest spread of 6%.