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AXIS Capital’s new Northshore Re II cat bond grows 65% to $165m


AXIS Capital is set to execute on its latest and fourth catastrophe bond transaction at attractive terms, as the Northshore Re II Ltd. (Series 2019-1) has upsized 65% to $165 million, while pricing dropped to below guidance.

AXIS Capital logoThe specialty insurance and reinsurance company AXIS Capital Holdings Ltd. returned to the catastrophe bond market in June, as it sought to expand its collateralized sources of reinsurance and retrocession.

It is the fourth cat bond issuance to be sponsored by AXIS Capital, as the company continues to put sources of third-party reinsurance capital and the support of ILS funds and capital markets investors at the heart of its capacity, capital management and retrocession.

As we explained when this latest cat bond deal from AXIS Capital launched, the firms special purpose insurer (SPI) Northshore Re II Ltd. aimed to issue a single tranche of Series 2019-1 notes sized at $100 million.

The notes were set to be sold to cat bond investors and the proceeds from their sale used to collateralize a retrocessional reinsurance agreement with AXIS Capital.

We can reveal that investor appetite for the deal has helped to increase the size of this issuance for AXIS, with Northshore Re II now set to issue $165 million of Series 2019-1 cat bond notes to the investors.

So AXIS will benefit from $165 million of retrocession and reinsurance over a four year term for its subsidiaries, including its Lloyd’s syndicate, insurance and reinsurance companies, against certain losses from U.S. named storms (including in Puerto Rico and the U.S. Virgin Islands), U.S. & Canada earthquakes and European windstorm catastrophe events.

The protection is delivered on an industry loss trigger and annual aggregate basis, as has become so typical of retrocessional focused cat bond deals.

The now $165 million of Series 2019-1 notes being issued by Northshore Re II on behalf of AXIS Capital, which have an initial expected loss of 2.84%, were at first offered to ILS investors with coupon guidance in a range from 7.75% to 8.25%.

However, we’re told that at pricing the coupon dropped to settle at 7.5%, so below the initial guidance range.

While a pricing reduction, the multiple at market for these cat bond notes of roughly 2.6 times the expected loss is aligned with other recent transactions and higher than AXIS’ last Northshore cat bond deal.

You can read all about this now $165 million Northshore Re II Ltd. (Series 2019-1) catastrophe bond and every other cat bond deal in the Artemis Deal Directory.


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