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AXIS targets $100m+ Northshore Re II wind and quake cat bond


AXIS Capital, the global specialty insurance and reinsurance underwriter, is back in the capital markets with what will be its sixth catastrophe bond, seeking at least $100 million of protection from a Northshore Re II Ltd. (Series 2022-1) issuance.

AXIS Capital logoAXIS’ latest catastrophe bond has been launched to investors this week, sources told Artemis, coinciding with the firms announcement of a pull-back from underwriting property catastrophe reinsurance within its AXIS Re unit.

Of course, that announced pull-back doesn’t mean AXIS won’t be assuming natural catastrophe risks, given its broad underwriting across property and specialty lines.

So, embedding more capital markets backed protection into its reinsurance and retrocession arrangements with another catastrophe bond continues to make sense for the company.

This new cat bond will be the sixth Northshore branded issuance for AXIS Capital, having first entered the cat bond market back in 2013. Details of every AXIS sponsored cat bond can be found in our Deal Directory.

For its new cat bond, AXIS Capital is using Northshore Re II Ltd., its most recently established Bermuda based special purpose insurer (SPI).

Northshore Re II Ltd. will seek to issue a single tranche of Series 2022-1 Class A notes that will be sold to investors and the proceeds used to collateralize a retrocessional agreement between the SPI and AXIS itself.

The reinsurance coverage will protect AXIS and subsidiaries against losses from US named storms (inc. Puerto Rico & Virgin Islands), as well as U.S. & Canada earthquake risks.

The protection will be across a three year term to July 8th 2025, we understand, and the cat bond is structured to provide annual aggregate protection on a weighted industry loss trigger basis.

The $100 million or more in Series 2022-1 Class A notes will come with an initial attachment probability of 2.48% and initial expected loss of 2.02%, we’re told, while they are being offered to cat bond investors with price guidance in a range from 8.25% to 8.75%, we understand.

A Northshore Re II 2021 cat bond from AXIS came with a 1.9% initial expected loss and its notes eventually priced to pay investors a coupon of 5.75%.

While that 2021 cat bond also included European windstorm risks, the multiple for this year’s issuance is clearly a lot higher, reflecting reinsurance firming trends (4 X EL at the low-end of guidance, compared to the 2021 deal’s 3 X EL multiple).

It’s good to see AXIS continuing to look to the capital markets for a portion of its reinsurance and retro arrangements.

You can read all about this Northshore Re II Ltd. (Series 2022-1) catastrophe bond from AXIS Capital and every other cat bond deal ever issued in the extensive Artemis Deal Directory.

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