American Coastal Insurance Company (AmCoastal Insurance) continues to seek $200 million in multi-peril reinsurance from the capital markets from its Armor Re II Ltd. (Series 2026-1) catastrophe bond issuance, but the company is now aiming to capitalize on investor appetite and has adjusted and tightened the price guidance for the notes on offer, Artemis has learned.
As we’ve explained before, this Armor Re II Series 2026-1 catastrophe bond will be the first Florida-focused multi-peril cat bond where American Coastal Insurance Company is the sole sponsor.
The insurer previously sponsored two Armor Re II catastrophe bonds in 2024, with Armor Re II Ltd. (Series 2024-1) and Armor Re II Ltd. (Series 2024-2) both being $200 million in size and providing AmCoastal with Florida named storm reinsurance from the capital markets.
American Coastal Insurance Company made its return to the catastrophe bond market in late March, targeting a $200 million source of multi-peril reinsurance protection from the capital markets.
We have been told that target remains the same, but like most catastrophe bond sponsors, AmCoastal Insurance is seeking to adjust the pricing of the risk interest spread it will pay for the coverage, with one tranche lower and the other narrowed around the middle of initial guidance.
The cat bond will provide American Coastal with a just over three-year source of Florida focused reinsurance protection, for losses from the perils of named storm, earthquake fire following, severe weather and fire.
The term of coverage will run from June 1st this year until the end of May 2029, with maturity due early the following month, which makes this is a three year deal.
These Armor Re II 2026-1 cat bond notes have been structured to protect AmCoastal with Florida multi-peril reinsurance coverage for the losses from the perils named above on an indemnity trigger and per-occurrence basis over that risk period.
The still $100 million tranche of Class A notes that Armor Re II is looking to issue will attach their coverage at $50 million of losses to AmCoastal Insurance and exhaust at $250 million.
These Series 2026-1 Class A notes come with an initial attachment probability of 0.51%, an initial expected loss of 0.44%, and these were originally offered to cat bond investors with spread price guidance in a range from 5.5% to 6.25%. That guidance has now been lowered to a revised range of 5% to 5.5%, we are told.
A still riskier $100 million tranche of Class B notes will attach their reinsurance coverage at $225 million of losses and exhaust at $425 million, which gives them an initial attachment probability of 6.42%, and an initial expected loss of 4.22%.
These notes were initially offered to cat bond investors with spread price guidance in a range from 14.5% to 15.5%, but that guidance has now been revised around the middle of the initial range to 14.75% to 15.25%.
AmCoastal Insurance appears to be prioritising price over size with its latest catastrophe bond sponsorship. However, it’s important to remember that the company could choose to upsize it after it has an indication of the final pricing, which can sometimes occur during the marketing phase of cat bonds.
As a reminder, you can read all about this new Armor Re II Ltd. (Series 2026-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.
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