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American Integrity targets $125m Integrity Re II catastrophe bond issue


American Integrity has returned to the catastrophe bond market for what will be its fourth visit, as the company seeks to expand its capital markets backed sources of reinsurance against Florida named storms and hurricanes with a $125 million Integrity Re II Pte. Ltd. (Series 2020-1) transaction.

american-integrity-logoAmerican Integrity Insurance Company of Florida, Inc’s fourth visit to the catastrophe bond market sees the company again being assisted by German reinsurance firm Hannover Re which will front the capital markets by acting as ceding reinsurer for the deal.

American Integrity has elected to shift the domicile for this trip to the cat bond market, with the fourth Integrity Re transaction being issued out of Singapore.

The insurer will be benefiting from Singapore’s ILS grant program to assist in reducing the expense of issuance, we assume, with the issuing vehicle being a Singapore domiciled Special Purpose Reinsurance Vehicle (SPRV) named Integrity Re II Pte. Ltd., we understand.

Integrity Re II Pte. Ltd. will issue a single Series 2020-1 tranche of Class A notes that will be sold to investors to collateralise a retrocession agreement between it and Hannover Re, with the reinsurer then entering into a reinsurance agreement with American Integrity to provide the protection.

The issuance is targeting at least $125 million of reinsurance coverage for American Integrity across a three-year term.

The notes will provide the insurer with reinsurance protection against Florida named storms, so hurricanes and tropical storm events, with coverage on an indemnity trigger and per-occurrence basis, we’re told.

The $125 million of Class A notes to be issued by Integrity Re II Pte. Ltd. will have an initial expected loss of 1.98% and are being offered to cat bond investors with coupon price guidance in a range from 6.75% to 7.25%, sources explained.

The pricing should deliver a relatively high multiple at market for investors, which could make the transaction appealing.

This is the first pure Florida wind 144a catastrophe bond issuance for some time, so it will be interesting to see how strong investor demand is.

American Integrity has opted to get this cat bond to market well in advance of the main Florida reinsurance renewals of June 1st, which could result in better execution for the insurer as it comes to the cat bond market at a busy time, but when Florida related risks are not as abundant.

We’ll update you as this new Integrity Re II Pte. Ltd. (Series 2020-1) catastrophe bond comes to market and you can read about every cat bond deal in the Artemis Deal Directory.

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