Stabilitas Re Ltd. (Series 2023-1)

Conduit Re, the Bermuda-headquartered reinsurance company, is entering the catastrophe bond market for the first time, seeking $100 million or more in retrocession from a Stabilitas Re Ltd. (Series 2023-1) issuance.

Conduit Re has set up Stabilitas Re Ltd. in Bermuda for the issuance of catastrophe bonds and for its debut the vehicle will target the sale of $100 million of notes to cat bond investors to provide the reinsurance firm a source of capital markets backed retrocession.

This first Stabilitas Re Ltd. cat bond targets a source of both US named storm and US earthquake retrocessional protection for Conduit Re.

The $100 million or more in Series 2023-1 Class A notes that Stabilitas Re will issue for Conduit Re will provide the reinsurer protection on an industry loss trigger and annual aggregate basis, across a roughly three-year term to the end of May 2026, we understand.

We’re told the notes will have an attachment point at $200 million of losses to Conduit Re and cover losses to $300 million, while qualifying events will need to exceed a $10 billion franchise deductible for PCS reported industry losses from named storms or earthquake events.

The $100 million of notes will have an initial attachment probability of 3.86%, an initial base expected loss of 2.7% and are being offered to cat bond investors with price guidance of between 9% and 9.75%, sources said.

Update 1:

There hasn’t been any update to the size of this first Stabilitas Re catastrophe bond transaction, remaining at $100 million, but the target for the pricing has been lowered, with an updated spread guidance of between 8.5% and 9% now offered to investors.

Update 2:

Conduit Re has now priced its first catastrophe bond, with the notes remaining at a $100 million issuance, but the spread was finalised at the low-end of reduced guidance, at 8.5% representing a roughly 9% decline in pricing from the initial guidance mid-point.