AmFam secures upsized $275m of reinsurance from Four Lakes Re 2024-1 cat bond

American Family Mutual Insurance Company (AmFam) has now successfully secured the upsized $275 million in collateralized reinsurance protection it targeted from its latest Four Lakes Re Ltd. (Series 2024-1) cat bond issuance, while the risk spreads were priced at the low-end of reduced guidance.

AmFam ventured back to the catastrophe bond market in November, with an initial target to secure $175 million in multi-peril reinsurance protection to built-out its capital markets backed fully-collateralized catastrophe reinsurance arrangements.

As we then reported, AmFam’s target size for this Four Lakes Re 2024-1 cat bond increased, with $250 million of reinsurance being sought and at the same time the price guidance fell.

In a further update, we had then learned that the targeted size for the cat bond issuance had been raised again, with AmFam aiming to secure $275 million in capital market backed reinsurance from this deal.

Now, sources have told us that this upper-target has been secured, while at the same time both of the tranches of cat bond notes to be issued have been priced with their risk spreads now finalised at the bottom of their reduced price guidance ranges.

As a result, it is now confirmed that this Four Lakes Re Series 2024-1 cat bond will provide AmFam with $275 million of collateralized and multi-year reinsurance protection, covering losses from US named storms, earthquakes, severe thunderstorms, winter storms and wildfires, on a per-occurrence and indemnity trigger basis, running from January 2025 to the end of December 2027.

What was initially launched as a $125 million Class A tranche of Series 2024-1 notes, were first upsized to $175 million and then again to $200 million, which is where this tranche of notes have now been priced for AmFam.

The Class A notes come with an initial expected loss of 1.64% and were first offered to investors with spread price guidance in a range from 5.75% to 6.5%, which then fell and was fixed at the lower-end of 5.75%, before then reverting to a lower range at between 5.5% and 5.75% at the last update. We’re now told these notes have priced to pay investors a 5.5% spread, so the bottom-end.

What was originally a $50 million Class B tranche of notes were lifted to $75 million in size and that is where they have stayed.

The Class B notes come with an initial expected loss of 2.77% and were first offered with spread price guidance in a range from 8.5% to 9.25%, which was also then fixed at the low-end of 8.5% at the first update, but then reverted back to a range at between 8.25% and 8.5%. We understand these notes have also priced at the bottom-end, to pay investors a spread of 8.25%.

So, another example of very strong execution in the catastrophe bond market, with increased deal sizes and reducing spreads, delivering strong execution for sponsor AmFam and allowing the company to maximise the benefits of its trip to the capital markets for reinsurance.

You can read all about this new Four Lakes Re Ltd. (Series 2024-1) catastrophe bond from American Family in the Artemis Deal Directory.