Investment giant Blackstone is aiming to secure its latest and second catastrophe bond priced at the low-end of guidance, seeking as the company aims to seal the capital markets provision of $250 million of multi-peril and indemnity based catastrophe insurance protection through the Wrigley Re Ltd. (Series 2023-1) transaction.
Blackstone returned to the catastrophe bond market in June, seeking its largest slice of catastrophe insurance protection from the market, while also shifting its goal to indemnity cover and a wider range of perils, rather than the parametric earthquake cover secured with its first$50 million Wrigley Re Ltd. (Series 2021-1) deal.
This Wrigley Re 2023-1 catastrophe bond targets issuance of a $100 million per-occurrence tranche of notes to provide named storm protection across the US and Canada, as well as annual aggregate earthquake protection for all US states except California and Canada.
As well as a $150 million tranche of annual aggregate notes that will provide Blackstone with California only earthquake protection.
Both tranches will provide indemnity catastrophe insurance protection across a roughly three-year term to Blackstone and the real estate investment portfolios it manages.
The two tranches of Wrigley Re Series 2023-1 catastrophe bond notes are being sold to collateralize retrocessional reinsurance agreements with global reinsurer Hannover Re, who fronts the capital markets for Blackstone, then passing on the coverage through reinsurance agreements to the Gryphon Mutual Property Americas IC real estate captive insurer of the investment giant, which in turn passes the coverage on to real estate funds managed by Blackstone.
As of the latest update, there has been no change to the size target for this catastrophe bond, with still $250 million of protection sought by Blackstone.
But the pricing has been adjusted, we’re told, with both tranches not aiming for pricing at their low-ends of guidance.
The Class A tranche of notes that will provide Blackstone with per-occurrence named storm protection across the US and Canada, as well as annual aggregate earthquake protection for all US states except California and Canada, and have an initial expected loss of 0.56% were initially offered with spread price guidance in a range from 6.5% to 7%, but that has now been fixed at the low-end of 6.5% we understand.
The Class B tranche of notes that will provide Blackstone with annual aggregate California only earthquake protection, that have an initial expected loss of 1.03%, were first offered with spread price guidance in a range from 7% to 7.5%, and this has also now fallen to the low-end of 7%, we’re told.
It looks like there won’t be much change to this cat bond issuance from here, with Blackstone set to benefit from investor appetite for the risk, to secure strong price execution and a reduction in premium paid for the coverage from the initial target guidance.