Mayflower Re Ltd. (Series 2025-1)

This new issuance will become the sixth catastrophe bond sponsored by the Massachusetts Property Insurance Underwriting Association (MPIUA), a residual market property insurance association or FAIR Plan for the Commonwealth of Massachusetts.

The MPIUA is again using its Bermuda-based vehicle Mayflower Re Ltd. for this 2025 catastrophe bond.

We’re told the issuance will feature a single currently $150 million tranche of Class A Series 2025-1 notes that will be sold to investors.

The proceeds from that sale will be used to collateralize a retrocessional reinsurance agreement with global reinsurer Hannover Re, which is acting as the fronting risk transformer for this cat bond and will in turn provide the catastrophe reinsurance to the MPIUA.

This Mayflower Re Series 2025-1 cat bond will provide the MPIUA with a multi-year source of indemnity based and annual aggregate reinsurance over a three-year term, running until the end of June 2028, sources have told us.

The currently $150 million tranche of Series 2025-1 Class A notes will cover the MPIUA against certain losses from Massachusetts named storms, severe thunderstorms and winter storms, the same range of perils covered by previous cat bonds that benefited the insurer.

As with prior issuances for the MPIUA, an event must breach a $10 million ultimate net loss deductible to qualify for aggregation, we understand.

The Class A tranche of notes have a preliminary size of $150 million and would initially cover losses from an attachment point of $1.75 billion, exhausting at $2.35 billion of losses to the MPIUA risk pool.

As a result, the Mayflower Re Series 2025-1 Class A notes will come with an initial attachment probability of 1.052%, an initial base expected loss of 0.901% and these notes are being marketed to investors with spread price guidance in a range from 3.25% to 3.75%.

Update 1:

We understand that the target for this Mayflower Re Series 2025-1 catastrophe bond was raised to $200 million, while the price guidance was fixed at the mid-point of 3.5%.

Update 2:

We’re now told that the MPIUA has lifted the size target for this Mayflower Re 2025-1 cat bond for a second time, with now between $200 million and as much as $225 million of reinsurance being sought.

The price guidance remains at the fixed 3.5%.

Update 3:

We’re told the MPIUA secured the 50% upsized $225 million of reinsurance from this Mayflower Re 2025-1 cat bond, while the notes were priced at the mid-point of guidance for a spread of 3.5% to be paid to investors.