American Family Mutual Insurance Company, or AmFam as it is abbreviated, is the latest company to lift the target size of a new catastrophe bond, with it now seeking $175 million in capital market backed multi-peril catastrophe reinsurance, from the Four Lakes Re Ltd. (Series 2023-1) cat bond issuance.
American Family (AmFam) returned to the catastrophe bond market last month with a $150 million target for what will be the insurers sixth visit to the catastrophe bond market.
American Family (AmFam) has sponsored a Four Lakes Re catastrophe bond every year since 2020, being a consistent user of capital markets capacity within its reinsurance arrangements.
Having now lifted its target for this latest cat bond by $25 million, to now seek $175 million of reinsurance, according to our sources, we are also told that the pricing looks set to be towards the upper-ends of guidance for both of the tranches of cat bond notes on offer.
We’ve seen repeated cat bond issuances upsize despite their pricing also coming in above the mid-point of guidance lately, reflecting the still hard state of the reinsurance market and implying sustained spreads and returns moving into 2024.
This new Four Lakes Re 2023-1 cat bond will provide with multi-peril US catastrophe reinsurance protection against US named storms, earthquakes, severe thunderstorms, winter storms and wildfires, on a per-occurrence and indemnity trigger basis, across a three calendar year term, from January 2024 to the end of December 2026.
What was a $100 million Class A tranche of notes are now sized at $125 million, we understand.
The Class A notes have an initial expected loss of 0.63% and were first offered with spread price guidance in a range from 5% to 5.75%, but we’re now told the price guidance has been fixed at the upper-end of 5.75%.
The Class B tranche of notes remains $50 million in size.
The Class B notes are riskier with initial expected loss of 2.44% and were first offered to investors with spread price guidance in a range from 9% to 9.75%, but we’re now told this guidance has been fixed at 9.5%.
At $175 million, this new Four Lakes Re 2023-1 cat bond will replace the $175 million Four Lakes Re Ltd. (Series 2020-1) that matures at the end of this year, although sitting a little differently within the AmFam reinsurance tower.
You can read all about this new Four Lakes Re Ltd. (Series 2023-1) catastrophe bond from American Family in the Artemis Deal Directory.
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