American Integrity sponsoring third cat bond, a $75m Integrity Re 2019

Florida headquartered primary insurer American Integrity Insurance Company of Florida, Inc. is back to sponsor its third catastrophe bond transaction with a currently $75 million Integrity Re Ltd. (Series 2019-1) transaction.

This is the third consecutive month of May that American Integrity has ventured to the capital markets to diversify its sources of reinsurance with the help of collateralized protection.

Again, German reinsurance firm Hannover Re is assisting the insurer, as its Hannover Rück SE entity acts as ceding reinsurer for the transaction.

Hannover Re therefore is fronting the ILS investor base on behalf of American Integrity, which is the actual reinsured and so ultimate beneficiary of the fully-collateralized reinsurance protection that this Integrity Re 2019-1 cat bond will provide.

For this third issuance under the Integrity Re cat bond special purpose vehicle, we’re told that American Integrity is again seeking a four-year source of collateralized reinsurance protection covering certain losses from named storms and severe thunderstorms affecting the state of Florida.

The notes issued will provide a source of indemnity triggered reinsurance protection, on a per-occurrence and cascading basis, meaning the coverage will drop down as inuring layers of reinsurance protection beneath are eroded by loss.

A single tranche of Series 2019-1 Class A notes are being issued, with the initial size set at $75 million.

To effect the coverage, Integrity Re will sell the notes to ILS and cat bond investors, with the proceeds used to collateralize a retrocession agreement with Hannover Re, which will in turn enter into a reinsurance agreement with American Integrity Insurance.

The mooted $75 million of Integrity Re 2019-1 Class A notes will attach at $275 million of losses to American Integrity and cover losses up to $432.5 million, we understand. This gives plenty of room for the cat bonds size to increase during marketing, if investor demand allowed and American Integrity wanted to cover more of this layer of its reinsurance program.

This will give the notes an initial expected loss of 1.14% and we’re told they are being offered to investors with price guidance in a range from 4.25% to 4.75%.

It’s encouraging to see another Florida cat bond launch with what looks to be a higher available multiple for investors than would have been seen a year ago.

We’ll keep you updated as this Integrity Re Ltd. (Series 2019-1) cat bond comes to market and you can read about this and every other transaction in the Artemis Deal Directory.

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