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ARX’s Bonanza Re 2022-1 catastrophe bond priced at top-end of guidance


The new Bonanza Re Ltd. (Series 2022-1) catastrophe bond transaction, that is being issued for ARX Holding, the Progressive-owned parent of American Strategic Insurance Group, has now been priced and did not upsize, remaining $135 million in size, the notes priced at the top-end of guidance.

american-strategic-progressive-logoARX Holding returned to the catastrophe bond market a fortnight ago, with the company seeking higher-layer and per-occurrence reinsurance protection against major US named storm and hurricane losses.

That represented a shift in strategy from last year’s aggregate reinsurance focused Bonanza Re Ltd. (Series 2021-1).

The beneficiaries of the new ARX Holding cat bond, which is the fifth Bonanza Re deal and the sixth cat bond from the sponsor, will be American Strategic Insurance Group and its insurer entities.

Bonanza Re Ltd., the sponsors’ Bermuda domiciled special purpose insurer (SPI), is set to issue a single tranche of Series 2022-1 Class A notes and the size of the tranche has remained at the launch target of  $135 million.

That’s despite this new cat bond coverage spanning a larger layer of the ARX Holding reinsurance tower, which meant it had plenty of room for the issuance to upsize.

But with pricing now fixed at the top-end of guidance, it seems the appetite wasn’t there to secure more reinsurance from this cat bond for the sponsor.

This Bonanza Re 2022-1 catastrophe bond will provide American Strategic insurance entities with a $135 million source of multi-year collateralized reinsurance from the capital markets, protecting the company against US named storm loss events over a three year term, running to March 2025 on an indemnity trigger and per-occurrence basis.

The $135 million of Class A notes that Bonanza Re will issue cover losses from an attachment point of $1 billion up to exhaustion at $1.4 billion, which gives them an initial expected loss of 2.03%.

The notes were first offered to investors with coupon price guidance in a range from 5.25% to 5.75%, but sources have now told us this has been fixed at the upper-end of 5.75%.

So American Strategic’s new cat bond won’t be the biggest, but it does demonstrate the sponsors’ continued use of the capital markets to augment and extend its reinsurance tower, with this now expanding into its per-occurrence coverage as well, a positive development.

You can read all about this Bonanza Re Ltd. (Series 2022-1) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.

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