Lower Ferry Re Ltd. (Series 2026-1)

This will be the third catastrophe bond sponsorship for NJM Insurance Group, which is the more commonly used brand name of New Jersey Manufacturers Insurance Company, an American mutual insurance group of companies that offers auto and property lines of coverage across certain states in the Northeast US.

For its third cat bond sponsorship, NJM Insurance is using its Bermuda domiciled special purpose insurance vehicle named Lower Ferry Re Ltd. for the second time.

Lower Ferry Re Ltd. is offering three tranches of notes to investors, with the proceeds from their sale set to collateralize multi-year reinsurance agreements to benefit NJM Insurance and its subsidiaries, we understand.

The initial target is for at least $150 million of reinsurance, but one tranche of notes remains unsized at this time meaning this offering could grow if it is well-received by the cat bond investor base.

This Lower Ferry Re Series 2026-1 cat bond offering will provide NJM Insurance with a source of multi-year US named storm reinsurance protection across the Northeast US states of New Jersey, Pennsylvania, Delaware, New York, Connecticut, Maryland and Ohio, the same states as the maturing 2023 deal.

The reinsurance protection from this Lower Ferry Re 2026-1 cat bond will cover NJM Insurance across a three-year term, to the end of June 2029, on an indemnity and per-occurrence basis, we are told.

The offering includes an as yet unsized Class A tranche of notes, that would attach at $800 million of losses and exhaust their coverage at $1.1 billion, giving them an initial attachment probability of 1.36%, a base expected loss of 1.18% and they are being offered with price guidance indicating a spread of between 3% and 3.5%.

A Class B tranche of notes are currently sized as a $50 million offering and would attach their coverage at $600 million of losses, exhausting it at $800 million, which gives them an initial attachment probability of 1.62%, a base expected loss of 1.49% and these are being offered with price guidance indicating a spread of between 3.25% and 3.75%.

The final Class C tranche of notes are currently sized at $100 million and would attach their coverage at $300 million of losses, exhausting it at $600 million, giving them an initial attachment probability of 2.4%, a base expected loss of 2% and these are being offered with price guidance for a spread of between 4.25% and 4.75%, sources said.