ARX Holding, the Progressive-owned parent of American Strategic Insurance Group, is back in the catastrophe bond market with a US named storm focused issuance and is seeking $135 million or more in collateralized reinsurance protection from a Bonanza Re Ltd. (Series 2022-1) transaction.
For this catastrophe bond, the company is seeking higher-layer occurrence reinsurance protection against major US named storm and hurricane losses, a shift in strategy from last year’s aggregate coverage focused Bonanza Re Ltd. (Series 2021-1).
The beneficiaries of the reinsurance coverage provided by this latest cat bond, which will be the fifth Bonanza Re deal and the sixth cat bond from the sponsor, will be American Strategic Insurance Group and its insurer entities.
Sources have told us that Bonanza Re Ltd., the sponsors Bermuda domiciled special purpose insurer (SPI), will look to issue a single tranche of Series 2022-1 Class A notes for its latest cat bond.
The target size for the Class A notes is said to be $135 million, although this will span a larger layer of the ARX Holding reinsurance tower, so there is room for the issuance to upsize.
The Bonanza Re 2022-1 catastrophe bond is designed to provide American Strategic insurance entities with a source of multi-year collateralized reinsurance from the capital markets, to protect the company against US named storm loss events over a three year term, running to March 2025, we understand.
The protection will be afforded on an indemnity trigger and per-occurrence basis.
The $135 million or more of Class A notes that Bonanza Re is offering will cover losses from an attachment point of $1 billion up to exhaustion at $1.4 billion, giving them an initial expected loss of 2.03%, we’re told.
The notes are being offered to investors with coupon price guidance in a range from 5.25% to 5.75%.
A final noteworthy point, related to this catastrophe bond issuance, is that it is the first where the sole structuring agent and bookrunner is named as Gallagher Securities, so the first example of the new name that we’ve seen in a cat bond issuance since Gallagher acquired Willis Re Securities.
We’ll update you as this new Bonanza Re 2022-1 catastrophe bond comes to market.