AXIS Capital, the global specialty insurance and reinsurance underwriter, is now aiming to secure an upsized $140 million of peak-peril catastrophe reinsurance protection from its new Northshore Re II Ltd. (Series 2022-1) catastrophe bond issuance.
At the same time as seeking to increase the size of the deal, AXIS Capital is also seeking to finalise it with pricing at or below the bottom of initial coupon guidance.
As a result, this is yet another sign of potentially improving cat bond market conditions for sponsors, with spread widening seemingly slowing or coming to a halt, for now.
AXIS’ latest catastrophe bond was launched to investors roughly ten days ago, coinciding with the firms announcement of a pull-back from underwriting property catastrophe reinsurance within its AXIS Re unit.
This new issuance will be the sixth Northshore branded catastrophe bond for AXIS Capital, having first entered the market back in 2013. Details of every AXIS sponsored cat bond can be found in our Deal Directory.
At launch AXIS was seeking $100 million or more in reinsurance protection from the deal, but now with the targeted upsizing, it looks likely that Northshore Re II Ltd. will issue a $140 million single tranche of Series 2022-1 Class A notes to provide AXIS with reinsurance coverage against losses from US named storms (inc. Puerto Rico & Virgin Islands), as well as U.S. & Canada earthquake risks.
The retro reinsurance cover will be across a three year term to July 8th 2025 and the cat bond is structured to provide AXIS with annual aggregate protection on a weighted industry loss trigger basis.
The now $140 million in Series 2022-1 Class A notes will come with an initial attachment probability of 2.48% and initial expected loss of 2.02%, and were first offered to cat bond investors with price guidance in a range from 8.25% to 8.75%.
Now, we understand the pricing has dropped, with the latest guidance being for a coupon of between 8% and 8.25%.
It’s looking as if AXIS will be the latest sponsor to secure its cat bond with execution at an attractive pricing level, compared to the guidance, as spread widening slows or draws to a halt with a more-balanced supply-demand equilibrium now seen in the cat bond market.