Swiss Re Insurance-Linked Fund Management

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Catlin’s Galileo Re cat bond jumps in size to $250m, pricing drops


The Galileo Re Ltd. (Series 2013-1) catastrophe bond which was launched to the ILS investor market a week ago on behalf of global specialty property and casualty insurance and reinsurance firm Catlin has jumped in size by almost 43% and seen its price guidance fall to below the initial range.

Update here: This cat bond increased in size again at pricing to $300m.

Yet again the catastrophe bond investment market has demonstrated its appetite for new risk, helping the Galileo Re cat bond grow in size. It’s reflective of demand in the market, a continued acceptance of catastrophe reinsurance risk by investors and an, as yet, unsatisfied demand from investors looking to put capital to work.

Galileo Re, which will provide Catlin with protection on an annual aggregate and industry loss basis for U.S. named storms, U.S. earthquakes, Canada earthquakes and European windstorm risks, was launched offering a single tranche of $175m notes. We understand that the size of the cat bond has been increased by almost 43% to $250m to meet investor demand, allowing Catlin to maximise the cover it requires from the deal.

At the same time as increasing in size the suggested price guidance has been reduced considerably. The notes were initially offered with coupon guidance of a range of 7.75% to 8.5%. The price guidance has been reduced down to a range of 7.4% to 7.75%, according to our sources, a drop of almost 7% in pricing from the mid-point of each range.

We understand that the Galileo Re cat bond is expected to price later this week and will be completed before the end of October.

So again the catastrophe bond and ILS investor market shows its appetite for risk and its ability to take on peak risks for lower than perhaps originally expected pricing. This brings value to sponsors, who benefit from more cover at a reduced cost, as well as more risk to the ILS market which will in turn help to encourage more capital to enter the space.

We’ll update you as Catlin’s latest catastrophe bond progresses to market. You can read all about Galileo Re Ltd. (Series 2013-1) in our Deal Directory.

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