Swiss Re Insurance-Linked Fund Management

Xactanalysis Insights and PCS

AXIS’ Northshore Re cat bond grows in size, pricing drops below guidance


Yet another catastrophe bond has increased in size, from the preliminary volume it launched with, while at the same time the coupon price guidance has been reduced below the initial guide range. The Northshore Re Limited (Series 2013-1) cat bond is the first to be sponsored by AXIS Capital Holdings Ltd.

The Bermuda based provider of global specialty insurance and reinsurance products, AXIS, launched its first cat bond recently aiming to secure a source of collateralized, capital market backed reinsurance protection. The cover provided to AXIS by the Northshore Re catastrophe bond will be over a three-year period for U.S. hurricanes and earthquakes on an annual aggregate basis using a state-weighted PCS industry loss index.

The Northshore Re cat bond launched with a preliminary size of $150m from the single tranche of Series 2013-1 Class A notes. Sources tell us that the tranche has increased in size by 33% to now offer $200m of notes for sale and protection to AXIS.

At the same time as the cat bond has increased in size, the coupon price guidance it has been marketed to investors with has been reduced. The deal launched with price guidance of 7.5% to 8.5%, but we understand that this has been reduced significantly to a much tighter range of 7.25% to 7.5%, so below the original price guidance. This is a reduction of just under 8% in pricing if you take the mid-point of the original and revised ranges.

AXIS Capital will be delighted with its ability to increase the size of this cat bond and at the same time cheapen its price. It’s another reflection of the demand in the cat bond market that the latest transaction sees strong investor demand despite including U.S. wind risk and us being in the middle of the U.S. hurricane season.

We understand that the order books for the Northshore Re cat bond close today and the deal will complete and settle in the first week of August.

You can read all about AXIS Capital’s first catastrophe bond, Northshore Re Limited (Series 2013-1), in our catastrophe bond and ILS Deal Directory.

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