Allied World looks to upsize first cat bond by one-third to $200m

Allied World Assurance Company (AWAC), a global insurance and reinsurance company and part of the Fairfax Financial group, aims to increase the size of its first catastrophe bond deal, with the 2001 CAT Re Ltd. (Series 2020-1)  multi-peril issuance now targeting $200 million of reinsurance limit for the company.

That’s an increase of one-third on the $150 million initial target that the 2001 CAT Re Ltd. catastrophe bond came out of the gates with and reflects the strong appetite of cat bond funds and their investors to support the reinsurance needs of carriers like Allied World at this time.

At the same time as looking set to upsize, AWAC’s first cat bond deal also looks set to come in at pricing at or below the mid-point of initial guidance, another indication of the strong demand from investors in the catastrophe bond market right now.

So now, if it closes on the new target, AWAC will benefit from a three-year, $200 million source of collateralized reinsurance from the capital markets with this 2001 CAT Re deal.

The cat bond will provide Allied World and subsidiaries with a source of multi-year protection against losses from U.S named storms, U.S. and Canada earthquake, U.S. severe thunderstorm and European windstorm risks, with this multi-year reinsurance coverage provided on an annual aggregate and an industry loss trigger basis.

The cat bond launched to investors as an offering of a $150 million Series 2020-1 tranche of Class A notes, with an initial expected loss of 5.4% and coupon price guidance in a range from 12% to 13%.

Now, we’re told that 2001 CAT Re Ltd. looks like to issue $200 million of notes and that the pricing guidance has now fallen and the range been narrowed to between 12% and 12.5%.

All of which will represent a successful first trip to the catastrophe bond market to source reinsurance protection for Allied World, if this deal upsizes as now indicated and the coupon pricing settles at the mid-point or lower for the firm.

You can read all about this new 2001 CAT Re Ltd. (Series 2020-1) catastrophe bond and more than 700 other cat bond transactions in the Artemis Deal Directory.