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Pelican IV Re Ltd. (Series 2017-1)

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Pelican IV Re Ltd. (Series 2017-1) – At a glance:

  • Issuer: Pelican IV Re Ltd. (Series 2017-1)
  • Cedent / sponsor: Louisiana Citizens Property Insurance Corporation
  • Placement / structuring agent/s: GC Securities is sole structuring agent and bookrunner.
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: Louisiana named storm
  • Size: $100m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Apr 2017

Pelican IV Re Ltd. (Series 2017-1) – Full details:

Louisiana Citizens fourth catastrophe bond transaction sees it looking for reinsurance coverage on a more remote, higher layer of its tower than the previous deals, as it looks to tap the capital markets for cover that will attach at $350 million of Louisiana named storms indemnity losses.

Pelican IV Re is a newly established Bermuda special purpose insurance vehicle. For this deal, Pelican IV Re will seek to issue a single tranche of Series 2017-1 Class A notes, which will be sole to investors to collateralize a reinsurance agreement between it and the sponsor Louisiana Citizens.

The $100 million of notes will cover the sponsor against losses from Louisiana named storms (so tropical storms and hurricanes), on a per-occurrence basis and using an indemnity trigger structure.

The notes will attach at $350 million of losses to Louisiana Citizens and cover it up to $450 million, giving them an attachment probability of 1% and an expected loss of 0.86%.

The Pelican Re IV 2017-1 notes are being offered to ILS investors with coupon guidance of 2.75% to 3.25%, which as multiples go is relatively high, so again this cat bond could well price down during its marketing phase.

Update 1

Price guidance was reduced thanks to investor demand and the $100 million of Pelican IV Re notes are now being offered to cat bond investors with lowered price guidance of 2.25% to 2.75%.

Update 2

Demand from investors eventually helped the coupon come down to the bottom of the already reduced range and price guidance was fixed at 2.25%.

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