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AXIS returns with $250m Northshore Re II cat bond


Bermuda-headquartered specialty insurance and reinsurance firm AXIS Capital Holdings Ltd. has returned to the catastrophe bond market for its second transaction, with a $250 million Northshore Re II Ltd. (Series 2017-1) transaction, as it looks to the capital markets to boost its reinsurance and retrocession coverage.

AXIS Capital was last in the catastrophe bond market with a 2013 transaction, that was the re/insurers first deal, a $200 million Northshore Re Limited (Series 2013-1) deal, that matured in August 2016. No renewal was immediately forthcoming, but now AXIS is back looking to the capital markets as a complementary and efficient source of reinsurance coverage.

Sponsor AXIS has registered a new Bermudian special purpose insurer, Northshore Re II Ltd., which will issue a single tranche of Series 2017-1 notes, we understand from sources.

The notes issued by Northshore Re II will be sold to ILS and cat bond investors to collateralized a reinsurance agreement between the issuer and sponsor, in order to provide AXIS and its subsidiaries, including its Lloyd’s syndicate, insurers and reinsurers, with fully-collateralized reinsurance and retrocession.

The single tranche of $250 million Series 2017-1 Class A notes will protect AXIS and its subsidiaries against losses caused by U.S. named storms, U.S. earthquakes and Canadian earthquakes.

The reinsurance protection will be on a per-occurrence basis, across a three-year term and the Northshore Re II 2017 cat bond will feature a PCS industry loss index trigger, which will be weighted by state and province we understand.

The $250 million of Northshore Re II 2017-1 cat bond notes will have an initial attachment probability of 6.35%, an initial expected loss of 4.33% and is being offered to ILS investors with coupon price guidance in a range from 7.5% to 8.5%.

This pricing is keen, with the multiple just 1.84 times the expected loss at the mid-point of that range, so it will be interesting to see where this transaction settles.

It’s encouraging to see AXIS Capital returning to the catastrophe bond market and looking to the capital markets and ILS investors for assistance with its reinsurance and retrocession.

This Northshore Re II Ltd. (Series 2017-1) catastrophe bond transaction will add to the growing second-quarter issuance tally, as it is slated for completion before the end of this month, we understand.

We’ll update you as the deal comes to market and you can read details on every catastrophe bond transaction in the Artemis Deal Directory.

Under a month to go until our ILS Asia 2017 conference, tickets on sale here.
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