Global specialty property and casualty insurance and reinsurance firm Catlin’s latest catastrophe bond transaction, Galileo Re Ltd. (Series 2013-1), has grown in size again as the deal reached final pricing. The cat bond is now $300m in size after investor demand helped it upsize by 71% while marketing.
The Galileo Re Ltd. catastrophe bond, which covers Catlin on an annual aggregate and industry loss basis for U.S. named storms, U.S. earthquakes, Canada earthquakes and European windstorm risks, launched at $175m in size. The deal increased by 43% to $250m and the price guidance dropped to below the original target range a few days ago, but investor demand is clearly still strong for cat bonds which we understand has lifted the deals size again.
Sources told Artemis today that Galileo Re Ltd. is set to complete offering $300m of Series 2013-1 Class A notes at final pricing of 7.4% above U.S. treasuries.
This is a significant increase in deal size for Catlin. Having launched the deal at $175m, seen it increase in size by 43% and then another 20% (or an increase in size of 71% all told since launch), while at the same time the pricing has dropped to the lower end of an already reduced range.
In terms of pricing the cat bond launched with price guidance of 7.75% to 8.5%, which then fell to a range of 7.4% to 7.75%. At final pricing we’re told it settled at the bottom of that new range, at 7.4%.
That’s a solid reduction in pricing of this cat bond of close to -9% (from the original range mid-point, as much as 13% from the upper limit of that range) while it was marketing, which combined with the significant increase in size suggests that Catlin is getting the cat bond cover for a very good price. This clearly demonstrates the continued demand that capital markets and ILS investors have for catastrophe reinsurance risk in securitized form and bodes well for any issuers coming to market with a cat bond during the last quarter of the year.
Galileo Re is slated to complete at the end of October. We’ll update you once Catlin’s latest catastrophe bond has settled. You can read all about Galileo Re Ltd. (Series 2013-1) in our Deal Directory.