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American Integrity seals $150m Integrity Re II cat bond at top-end pricing


The first catastrophe bond to be sponsored in Singapore by U.S. primary insurer American Integrity will settle at the high-end of size targets of $150 million, but with pricing also at the high-end of guidance as investor demand for higher coupons persists in the market.

american-integrity-logoThe Integrity Re II Pte. Ltd. (Series 2020-1) catastrophe bond transaction was launched at the beginning of the month, with American Integrity looking to sponsor its fourth catastrophe bond issuance.

It is the sponsors first cat bond to be issued out of Singapore, as American Integrity seeks to take advantage of the country’s ILS grant program to reduce its issuance costs for this transaction.

At launch of this cat bond, American Integrity was seeking at least a $125 million source of capital markets backed Florida named storm reinsurance coverage across a three-year term.

At pricing the deal successfully achieved its upsize target, growing by 20% to become a $150 million issuance of notes.

American Integrity is helped in this process by reinsurance firm Hannover Re, which acts as the ceding reinsurer and fronts the capital markets for the insurer.

The now $150 million of Integrity Re II 2020-1 cat bonds notes will soon provide American Integrity with reinsurance protection against Florida named storms on an indemnity trigger and per-occurrence basis.

The $150 million Class A tranche of notes have an initial expected loss of 1.98% and were initially offered to investors with coupon price guidance in a range from 6.75% to 7.25%.

At final pricing, the notes settled to offer a coupon at the top-end that guidance range, at 7.25%.

As the first pure Florida wind 144a catastrophe bond issuance of the year, this Integrity Re II Pte. transaction provides a glimpse into Florida reinsurance pricing for 2020.

The pricing is a definite uptick from American Integrity’s previous cat bonds, but with no comparable tranches, as previous Integrity Re cat bonds also featured severe thunderstorm risks, it is hard to make a true comparison.

But the multiple is significantly higher than any of American Integrity’s previous cat bond tranches, according to our data, suggesting an increase in pricing of Florida wind reinsurance layers for 2020, as is expected to be seen at the June renewals.

As we explained before, the data available so far from early reinsurance renewals and cat bonds suggests that Florida and U.S. coastal loss affected reinsurance rate increases may be up by as much as 20% level, in some cases perhaps a little higher, at the June 2020 renewal season.

You can read all about this new Integrity Re II Pte. Ltd. (Series 2020-1) catastrophe bond and every cat bond deal in the Artemis Deal Directory.

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