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American Integrity returns with $125m Integrity Re 2022-1 cat bond


American Integrity Insurance Company of Florida, Inc. has returned to the catastrophe bond market with its fifth issuance, Integrity Re Ltd. (Series 2022-1), to replace and expand on maturing coverage and with a target for $125 million or more of Florida named storm reinsurance protection.

american-integrity-logoAmerican Integrity has been sponsoring catastrophe bonds to provide Florida focused collateralized and multi-year reinsurance protection since  2017, sponsoring four transactions since that year.

A $79 million Florida wind and thunderstorm cat bond matures in 2022, so this new Integrity Re 2022-1 cat bond should easily replace that coverage for the insurer.

For its latest catastrophe bond, American Integrity has switched back to using its Bermuda special purpose insurer Integrity Re Ltd., having used Singapore for its last issuance of a Integrity Re II Pte. Ltd. cat bond in 2020.

Integrity Re Ltd. is aiming to issue two tranches of Series 2022-1 notes, with a target issuance size of $125 million or more.

The notes will be sold to investors and the proceeds used to collateralize reinsurance agreements between American Integrity’s fronting and risk transformation partner for the cat bond, Hannover Re, and the special purpose vehicle.

Integrity Re Ltd. will therefore enter into two retrocession agreements with Hannover Re, one for each tranche of notes, with that reinsurer then entering into reinsurance agreements with American Integrity to provide the protection.

This Integrity Re Series 2022-1 cat bond will provide American Integrity with reinsurance protection against named storm events in Florida, on an indemnity and cascading per-occurrence basis and over a three-year term, so covering three Atlantic hurricane seasons, we’re told.

With this catastrophe bond American Integrity is building out more of the upper-layers of its reinsurance tower with the capital markets support, with the two tranches set to inure to reinsurance beneath and their attachment cascading down as layers of protection beneath are eroded by first and subsequent events.

A currently $75 million Class A tranche of notes are the more risk remote, having an initial expected loss of 1.37% at the base case and being offered to investors with price guidance in a range from 6.25% to 6.75%.

A currently $50 million Class B tranche sit a few layers further down, having an initial expected loss of 1.62% base, and offering investors a coupon of between 7.25% and 8%.

We’re told it would take a first event causing American Integrity over $850 million of losses to attach the notes first time around, obviously less for a second event, should a smaller storm loss have eroded some of the layers sitting beneath.

This cascading type of occurrence protection can be extremely useful to Florida focused carriers, offering them a way to keep the protection more useful to them after catastrophe losses occur, without gaps in their reinsurance towers opening up.

It’s encouraging to see American Integrity continue to be a consistent sponsor, working with cat bond investors to fill out its reinsurance needs in an efficient manner.

You can read all about this new Integrity Re Ltd. (Series 2022-1) catastrophe bond and every cat bond deal in the Artemis Deal Directory.

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