Bermuda-based specialty insurance and reinsurance firm AXIS Capital Holdings Ltd. has lifted the target size for its new Northshore Re II Ltd. (Series 2018-1) catastrophe bond to as much as $200 million, while at the same time the coupon offered to investors has fallen and will settle at the bottom of initial guidance or below it.
This is the third catastrophe bond from AXIS Capital and with the Northshore Re II 2018-1 issuance the firm is seeking four years of collateralized reinsurance and retrocession protection against losses from U.S. & Puerto Rico named storms, U.S. & Canada earthquakes and European windstorm catastrophe events.
The transaction was launched recently with a target size of $150 million or greater which AXIS Capital is now destined to secure, as we understand from sources that the Northshore Re II 2018-1 cat bond is likely to upsize to as much as $200 million.
The now likely to be $200 million of reinsurance coverage that AXIS receives from its new catastrophe bond will be on an annual aggregate basis, across four annual risk periods, and the cat bond features industry loss triggers for each covered peril.
When the deal launched, the $150 million of Series 2018-1 Class A notes, which have an initial expected loss of 4.47%, were offered to ILS investors and funds with coupon price guidance in a range from 8% to 8.5%.
Now, we’re told that price guidance range has dropped and the now up to $200 million tranche of notes issued by Northshore Re II are being offered to investors with a coupon range from 7.5% to 8%.
Should pricing be finalised at the bottom of the reduced range it means this new Northshore cat bond would offer investors almost exactly the same multiple as AXIS’ previous deal, at 1.67 times the expected loss.
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