American Family Mutual Insurance Company is aiming to upsize its latest issuance of a catastrophe bond, with the insurer now seeking $125 million of capital market backed, collateralised reinsurance from its new Four Lakes Re Ltd. (Series 2021-1) multi-peril cat bond issuance.
This is American Family Mutual Insurance Company’s second Four Lakes Re Ltd. catastrophe bond, following on from a $175 million multi-peril issuance in 2020.
The insurer returned to the insurance-linked securities (ILS) market in late November, seeking a $100 million or larger source of multi-peril reinsurance from this new deal.
We’re now told that American Family (AmFam) has lifted its target to $125 million, thanks to investor demand for the notes.
While at the same time the pricing has now been fixed in the lower-half of initial guidance.
AmFam’s reinsurance coverage from this Four Lakes Re 2021-1 catastrophe bond will run across a three-year period to the end of 2024, with the cat bond notes featuring an indemnity and per-occurrence trigger.
The sale of the notes will collateralize a reinsurance agreement between Four Lakes Re Ltd. and AmFam, covering it against certain losses from named storms, earthquakes, severe thunderstorms, winter storms, wildfires, volcanic eruptions and meteorite impacts, with the covered area spanning across the United States.
Four Lakes Re Ltd. will now issue a single $125 million tranche of Series 2021-1 Class A notes, that will attach at $1.05 billion of losses to AmFam and exhaust their coverage at $1.45 billion.
The Class A notes, which have an initial attachment probability of 2.07% and an initial expected loss of 1.37%, were first offered to cat bond investors with price guidance in a range from 4.5% to 5.25%.
We’re now told that the upsized $125 million of cat bond notes being issued by Four Lakes Re Ltd. look set to price at 4.75%, so in the bottom-half of guidance.