The Andover Companies is aiming to upsize its new catastrophe bond sponsorship, with the revised target now being to secure between $250 million and as much as $300 million of collateralized catastrophe reinsurance from the Locke Tavern Re Ltd. (Series 2026-1) issuance, Artemis can report.
The Andover Companies, a large and long-standing mutual insurance group in the Northeast US, sponsored its debut catastrophe bond back in March 2023.
That transaction secured the company $175 million of multi-peril catastrophe reinsurance protection from the capital markets, to protect its main underwriting entities and is scheduled to mature at the beginning of April 2026.
The Andover Companies returned to the catastrophe bond market in February with this new Series 2026-1 renewal transaction, with an initial target to secure $200 million of reinsurance from the offering.
Now, we are told that the target size has increased, with up to $300 million of protection now sought. While at the same time the price guidance has been fixed at the low-ends of initial guidance, as the sponsor seeks strong execution for the new cat bond deal.
With that new target in mind, Locke Tavern Re Ltd. is now offering up to $300 million of notes across the two Series 2026-1 tranches, with a goal to secure fully-collateralized multi-peril US northeast catastrophe reinsurance, on an indemnity trigger and per-occurrence basis, across a three-year term to the end of March 2029 for the Andover Companies.
Recall that the notes will provide the sponsor with protection against major losses from Northeast US named storm, severe thunderstorm, winter storm and earthquake risks, while the covered area will again span the states of Connecticut, Illinois, Maine, Massachusetts, New Hampshire, New Jersey, New York and Rhode Island.
What was a $100 million tranche of Series 2026-1 Class A notes are now targeted at between $125 million and $150 million in size, we understand. These notes come with an initial base expected loss of 1.302% and were first offered with price guidance in a range from 3.25% to 3.75%, but that has now been adjusted to the low-end of 3.25%, we are told.
What was initially a $100 million tranche of Series 2026-1 Class B notes are also now offered at between $125 million and $150 million in size. These notes come with an initial base expected loss of 1.96% and were initially offered with price guidance in a range from 4.25% to 4.75%, but they too have seen the price guidance lowered to the bottom-end at 4.25%, sources said.
Reflecting the more favourable pricing conditions in the catastrophe bond market we see today, these spreads are considerably lower than the Andover Companies soon to mature cat bond featured.
As we explained, that Locke Tavern Re 2023-1 cat bond had an initial expected loss of almost 0.92% and priced to pay investors a spread of 4.75%, so a significantly higher multiple than is indicated with either of these renewal tranches now look set to pay.
As a result, it’s perhaps no surprise the sponsor is looking to upsize its second catastrophe bond, to lock-in more long-term reinsurance at attractive pricing.
You can read all about this new Locke Tavern Re Ltd. (Series 2026-1) catastrophe bond, as well as details on over 1,000 other cat bond transactions in the extensive Artemis Deal Directory.
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