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AXIS’ Northshore Re II 2021 catastrophe bond grows 50% to $150m


AXIS Capital has increased the size of its latest catastrophe bond issuance by 50%, as the Northshore Re II Ltd. (Series 2021-1) transaction is now set to complete at $150 million in size, with pricing now been fixed below the initial guidance.

AXIS Capital logoThe Bermuda headquartered global specialty insurance and reinsurance firm returned to the catastrophe bond market to sponsor its first transaction of 2020 last month, with the Northshore Re II 2021-1 issuance targeting at least $100 million of retrocessional reinsurance for the company.

The reception from investors has seemingly been positive, sources said, giving AXIS the ability to upsize on this cat bond, lifting it by 50% so that it will now provide the company with $150 million of retro reinsurance protection.

So now, Northshore Re II Ltd., AXIS’ Bermuda based special purpose insurer (SPI), will issue $150 million of Series 2020-1 Class A notes to provide AXIS Capital and certain subsidiaries with a three-year source of multi-peril catastrophe reinsurance protection, coming on-risk from January 2021.

The protection will be on a weighted industry loss index trigger and annual aggregate basis, covering U.S. named storms (inc. Puerto Rico & Virgin Islands), U.S. & Canada earthquake risks and European windstorm risks.

As well as upsizing by 50%, AXIS’ latest cat bond has also priced below the initial guidance level, indicating a good result for the company with better than targeted pricing achieved.

The now $150 million tranche of Series 2021-1 Class A notes to be issued by Northshore Re II Ltd., which have an initial expected loss of 1.9%, were at first offered to investors with coupon price guidance in a range from 6% to 6.5%.

But we’re now told that the notes have been priced at 5.75%, so below the low-end of initial guidance.

At roughly 3 times the expected loss, it’s a higher multiple at market than AXIS’ 2019 Northshore Re II cat bond which had an initial expected loss of 2.84% and priced at 7.5%, so a multiple of 2.64 times EL. For further comparison, AXIS’ 2018 Northshore cat bond deal had an initial expected loss of 4.47% and priced at just 7.75%, so with a multiple of 1.73 times the EL.

Those multiples reflect the rising spreads available in the catastrophe bond market in 2020, as rates harden across reinsurance and retrocession and this reads across to the ILS market as well.

This Northshore Re II Ltd. (Series 2021-1) catastrophe bond settles at the end of next week, we understand. You can read about this and every other cat bond deal in the Artemis Deal Directory.

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