Skyline Re II Ltd. (Series 2025-1)

The Cincinnati Insurance Company is back in the catastrophe bond market for the first time since 2017, seeking $150 million or more in fully-collateralized reinsurance from the capital markets to cover losses from multiple US perils.

Previously, Cincinnati Insurance had sponsored three privately placed Skyline Re Ltd. catastrophe bonds, in 2013, 2014 and 2017.

Now, the company has established Skyline Re II Ltd. as an issuance structure for catastrophe bonds in Bermuda.

This Skyline Re II Series 2025-1 issuance sees a $150 million tranche of Class A notes being offered to investors, with the sale of the notes set to collateralize a multi-year reinsurance agreement to protect The Cincinnati Insurance Company and certain subsidiaries.

The cat bond notes will provide Cincinnati Insurance with a source of property catastrophe reinsurance coverage from the capital markets, protecting it against losses from the US perils of named storms, earthquakes, severe weather and fires, we are told.

The reinsurance coverage will be on an per-occurrence and indemnity trigger basis, running across a four-year term until the end of 2026.

The $150 million of Series 2025-1 Class A notes that Skyline Re II is offering will occupy and share in losses from an $800 million layer of the reinsurance tower, attaching at $1 billion of losses to Cincinnati Insurance, sources said.

The Class A notes come with an initial base attachment probability of 2.19%, an initial base expected loss of 1.27% and are being offered to cat bond investors with price guidance for a risk interest spread of between 4% and 4.75%, we understand.

Update 1:

Cincinnati Insurance Companies continues to target $150 million in reinsurance from this Skyline Re II Series 2025-1 catastrophe bond.

The insurer’s target pricing has been lowered though, with an updated price guidance range of between 3.5% and 4% now offered.