Montoya Re Ltd. (Series 2025-2)

This will be the fifth Montoya Re Ltd. catastrophe bond that will benefit sponsoring specialty insurer and reinsurer Inigo Insurance.

The ultimate beneficiary of the retrocessional reinsurance protection this Montoya Re 2025-2 cat bond will provide is again the carriers’ Lloyd’s Syndicate 1301.

This will become the first Montoya Re catastrophe bond to feature three tranches of notes and it also introduces a new peril to the program, of Australian earthquake risk.

Montoya Re Ltd. is seeking to issue three tranches of Series 2025-2 notes, with the issuance having an overall target size of $255 million or greater.

This Montoya Re 2025-2 cat bond also sees Inigo looking to secure both annual aggregate and second and subsequent event occurrence retro reinsurance, we are told.

Similar to all its previous cat bonds, Inigo’s Syndicate 1301 at Lloyd’s will be the ultimate beneficiary of the protection from this Montoya Re Series 2025-2 issuance.

Bermuda based special purpose insurer Montoya Re Ltd. is seeking to issue three tranches of Series 2025-2 notes, with an overall target size for the issuance of $255 million or greater.

All three tranches of Montoya Re 2025-2 cat bond notes will be sold to investors and the proceeds used to fully-collateralize a retrocessional reinsurance agreement between the special purpose insurer and Hannover Re, which will in turn enter into a reinsurance agreement with Inigo’s Syndicate 1301, we understand.

The coverage will run across more than four years, from the start of 2026 through until the end of March 2030, we understand, with final maturity due in early April 2030. That also makes this the longest tenure cat bond ever sponsored by Inigo.

Each of the tranches of notes will provide Inigo with retrocessional reinsurance coverage for the peak perils of U.S. named storms and U.S. and Canada earthquakes with industry losses reported by PCS, while a Class B tranche will also cover Australian earthquake industry losses as reported by PERILS, we are told.

A $175 million tranche of Class A notes will provide annual aggregate protection on an industry loss trigger basis for U.S. named storms and U.S. and Canada earthquakes, with a franchise deductible of $10 billion per-event.

The Class A notes will have an initial attachment probability of 3.86%, an initial expected loss of 2.26% and they are being offered to investors with price guidance in a range from 4.75% to 5.5%.

A $50 million tranche of Class B notes will provide annual aggregate protection on an industry loss trigger basis for U.S. named storms, U.S. and Canada earthquakes and Australian earthquakes, with a franchise deductible of $10 billion per-event for the North American perils and $2.5 billion for the Australian quake events, we understand.

The Class B notes are far riskier, attaching at a lower index point and will have an initial attachment probability of 8.59%, an initial expected loss of 7.19% and they are being offered to investors with price guidance in a range from 12.75% to 13.5%.

A $30 million tranche of Class C notes will provide second and subsequent event cover on an occurrence and industry loss trigger basis for U.S. named storms and U.S. and Canada earthquakes, sources said.

The Class C notes will have an initial attachment probability of 2.8%, an initial expected loss of 2.38% and they are being offered to investors with price guidance in a range from 5.75% to 6.75%.

Update 1:

The price guidance has been adjusted in all three cases, but the size targets remain the same for each tranche of notes on offer with this Montoya Re 2025-2 catastrophe bond for Inigo.

The $175 million tranche of Class A notes saw price guidance revised to 5.25% which is actually slightly above the initial mid-point.

The $50 million tranche of Class B notes saw guidance revised to a new range of 12.25% to 12.75%.

The $30 million tranche of Class C notes saw price guidance revised to 5.75%.

Update 2:

Inigo has now secured its targeted $255 million of protection from its new Montoya Re 2025-2 catastrophe bond.

The $175 million tranche of Class A notes priced to pay investors a spread of 5.25%, slightly above the initial mid-point.

The $50 million tranche of Class B notes priced to pay investors a spread of 12.5%, so that’s below the initial guidance range.

The $30 million tranche of Class C notes priced to pay investors a spread of 5.75%, so the bottom of the initial guidance.