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Pelican IV Re Ltd. (Series 2018-1)

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Pelican IV Re Ltd. (Series 2018-1) – At a glance:

  • Issuer: Pelican IV Re Ltd. (Series 2018-1)
  • 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 & severe thunderstorm
  • Size: $100m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Apr 2018

Pelican IV Re Ltd. (Series 2018-1) – Full details:

Louisiana Citizens has returned to the ILS market for its fifth catastrophe bond issuance in a deal that sees it looking for reinsurance coverage against losses from Louisiana named storms and severe thunderstorms. This is the first cat bond from Louisiana Citizens to feature severe thunderstorm risks as a covered peril.

With its fifth cat bond the insurer is expanding the capital markets backed reinsurance coverage it benefits from, adding severe thunderstorm risks to this Pelican IV Re 2018-1 deal, we understand.

For its latest cat bond, Louisiana Citizens special purpose insurer (SPI) Pelican IV Re Ltd. will issue a single $100 million tranche of Series 2018-1 Class A notes, which will be sold to ILS investors with the proceeds used to collateralize a reinsurance agreement between it and the sponsor.

The $100 million of notes will cover the sponsor against losses from Louisiana named storms (so tropical storms and hurricanes) and also Louisiana severe thunderstorms, across a three-year term with both on a per-occurrence basis and using an indemnity trigger structure.

The notes will attach at $300 million of losses to Louisiana Citizens and cover it up to $400 million, which is a layer directly below the insurers Pelican IV Re 2017 cat bond. The Series 2018-1 Class A notes will have an initial attachment probability of 1.12% and an initial expected loss of 0.97%.

The Pelican IV Re 2018-1 notes are being offered to cat bond investors with coupon pricing guidance of 2.25% to 2.75%.

Update 1:

Following the trend of almost every catastrophe bond launched this year, the Pelican Re IV 2018 notes are set to price down, we understand, with the coupon guidance now lowered to below the initial range, at 2% to 2.25%.

Update 2:

The notes have now been priced at the upper end of the reduced range, at 2.25%, so the bottom of initial guidance, as ILS investors declined to accept the lower coupon for the insurers first multi-peril transaction.

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