London Bridge 2 PCC Limited (Lapis 2025-1)

Brit Limited, the specialty insurance and reinsurance player that is part of the Fairfax Financial Group of companies, has returned to the catastrophe bond market to secure retrocessional reinsurance through its first cat bond sponsorship since 2020.

For this cat bond, Brit Limited is accessing the capital markets via the Lloyd’s insurance-linked securities (ILS) structure London Bridge 2 PCC Limited.

London Bridge 2 PCC Limited will issue the Lapis Series 2025-1 catastrophe bond notes and these will be sold to capital markets investors, with the resulting funds used to collateralize retrocessional reinsurance agreements to protect Brit’s reinsurance underwriting entity Brit Re and Brit Syndicates for its Lloyd’s Syndicate 2987, we understand from sources.

There are $100 million Lapis Series 2025-1 cat bond notes on offer initially with this issuance, designed to provide the Brit Re and Syndicate 2987 ceding entities with a multi-year source of weighted industry-loss trigger based annual aggregate catastrophe reinsurance protection.

The covered perils are said to be US named storms including DC, Puerto Rico and the US Virgin Islands, as well as earthquakes in the US, those same additional territories and Canada.

The retro reinsurance coverage will run from April 1st through until the end of 2028, so providing four hurricane seasons of coverage and three years eight months of earthquake protection, we are told.

The Lapis Series 2025-1 cat bond notes that London Bridge 2 PCC will issue come with an initial attachment probability of 4.2%, an initial expected loss of 3.58% and spread price guidance in a range from 7.75% to 8.5%, sources said.

We’re told there are franchise deductibles in place, in order for events to qualify and aggregate under the terms of this catastrophe bond, of $40 million for named storms and $75 million for earthquake industry loss events.

Update 1:

We understand the size target for this Lapis 2025-1 cat bond issuance by London Bridge 2 PCC for Brit has not increased, with still $100 million of notes on offer.

But the price guidance has been lowered, with an updated range of 7.5% to 7.75% now being offered.

Update 2:

We’re told that Brit has now successfully secured the targeted $100 million of reinsurance from its latest catastrophe bond deal.

The $100 million of Lapis Series 2025-1 catastrophe bond notes that London Bridge 2 PCC Limited will issue have now been priced to pay investors a spread of 7.5%, so were finalised below the initial guidance range.