Hestia Re Ltd. (Series 2025-1)

This is the third Hestia Re Ltd. catastrophe bond to be sponsored by direct-to-consumer insurtech Kin Insurance and the third to be issued by its Bermuda special purpose vehicle Hestia Re.

With this new Hestia Re Ltd. Series 2025-1 catastrophe bond, Kin Insurance is seeking at least $200 million of fully-collateralized reinsurance from the capital markets to cover named storm and hurricane risks in Florida.

Hestia Re Ltd., Kin’s Bermuda-based special purpose insurer (SPI), will look to issue two tranches of Series 2025-1 notes, preliminarily targeting $200 million in size, with these notes set to be sold to investors and the proceeds used to collateralize a reinsurance agreement between the SPI and ceding company.

The cedent is initially the Kin Interinsurance Network, but Kin will be able to add additional covered cedents should it introduce further underwriting entities during the term of the cat bond.

Both tranches of notes will provide Kin with a three hurricane season source of fully-collateralized Florida named storm reinsurance, on a indemnity trigger and per-occurrence basis, with cover running from June 1st this year to three years after the issuance completes, sources said.

A currently $100 million of Hestia Re Series 2025-1 Class A notes would attach at $605 million of losses and exhaust at $805 million, we understand.

That gives the Hestia Re 2025-1 Class A notes an initial attachment probability of 1.70% and an initial base expected loss of 1.51%, while they are being offered to cat bond investors with price guidance in a range from 7.25% to 8%, sources said.

An also $100 million Class B tranche are riskier, having an attachment point at $405 million of losses and an exhaustion point at $605 million.

Which gives the Hestia Re 2025-1 Class B notes an initial attachment probability of 2.54% and an initial base expected loss of 2.03%, while they are being offered to cat bond investors with price guidance in a range from 8.25% to 9%, we are told.

We are told that due to inuring reinsurance from other sources, an effective first-event attachment for the notes will be around $678.6 million for the Class B notes and $878.6 million for the Class A notes.

Update 1:

Kin’s target for its new Hestia Re 2025-1 catastrophe bond was raised to provide it as much as $300 million of reinsurance.

The Hestia Re Series 2025-1 Class A notes are now targeted at from $175 million to $200 million in size, with their price guidance revised at a lower range of 6.75% to 7.25%.

The $100 million Class B tranche which are riskier remain at that size, but their pricing has also fallen and now been fixed at the low-end of 8.25%.

Update 2:

The Hestia Re 2025-1 catastrophe bond was finalised to provide Kin the upsized target of $300 million of reinsurance.

The Hestia Re Series 2025-1 Class A notes will settle at the upsized $200 million, with their price finalised at the low-end of 6.75%.

The $100 million Class B tranche which are riskier remained at that size, with the pricing finalised at the low-end of 8.25%.