Insurance and reinsurance group Catlin has completed its latest catastrophe bond transaction, Galileo Re Ltd. (Series 2015-1), upsizing the transaction by 50% to close it securing $300m of protection for a variety of natural perils.
Galileo Re 2015-1 was launched a few weeks ago and saw Catlin seeking a 3 year source of fully-collateralized reinsurance protection for certain U.S. named storm, U.S. and Canada earthquake and European windstorm risks (the same perils as the 2013 Galileo Re deal).
All three of the perils are covered on an annual aggregate basis and the triggers used are weighted industry loss index triggers, with PCS providing the index data for U.S. wind and U.S. and Canada quake, while PERILS AG provides the trigger for European windstorm events.
This is a higher risk cat bond, launching with an initial attachment probability of 15.33% and an expected loss of 7.93%. As a result the coupon offered to investors is also higher than has been typical in the last few years, with the launch guidance range offering 13.5% to 14%.
The notes priced at the lowest end of guidance, according to sources, at 13.5%. In terms of a multiple, investors will be getting paid just 1.7 times the expected loss, which is a particularly low multiple perhaps reflecting the strong appetite for a higher-yielding bond.
The fact this cat bond upsized so much clearly shows the appetite that ILS investors have for a higher-yielding ILS note, which will be a boost to portfolios weighed down by many lower-yielding cat bonds issued over the last year or two.
The $300m tranche of Series 2015-1 Class A notes issued by Galileo Re Ltd. has been admitted for listing on the Bermuda Stock Exchange.