Cincinnati Insurance gets $150m Skyline Re II multi-peril cat bond at reduced pricing

Cincinnati Insurance Companies has now secured the targeted $150 million of fully-collateralized reinsurance from the capital markets through its new Skyline Re II Ltd. (Series 2025-1) catastrophe bond, as the notes have now been priced to pay a lower spread than the initial guidance, sources have told Artemis.

We had reported when this Skyline Re II 2025-1 cat bond launched to investors in late November that this is Cincinnati Insurance Companies first visit to the catastrophe bond market since 2017.

Using a new Bermuda based issuer Skyline Re II Ltd., Cincinnati Insurance returned with an ambition to secure multi-year and multi-peril collateralized catastrophe reinsurance protection from the cat bond market again.

As we reported in a first update on this offering, the size target of $150 million remained the same, but the price guidance was lowered and revised to a new range sitting below the one that was initially marketed.

Now, we’re told that the Skyline Re II 2025-1 cat bond notes have been successfully priced, to provide the sponsor Cincinnati Insurance with its desired $150 million of reinsurance protection, while the notes priced at the bottom of the reduced guidance range.

As a result, it is now confirmed that Skyline Re II Ltd. will issue and sell a $150 million tranche of Series 2025-1 Class A notes to investors.

The Class A notes will provide Cincinnati Insurance with a $150 million source of property catastrophe reinsurance coverage from the capital markets, protecting it against losses from the US perils of named storms, earthquakes, severe weather and fires.

That reinsurance protection is structured on a per-occurrence and indemnity trigger basis, while it will run across a four-year term until the end of 2029.

The $150 million of Series 2025-1 Class A notes that Skyline Re II come with an initial base expected loss of 1.27%.

The notes were first offered to cat bond investors with price guidance for a risk interest spread of between 4% and 4.75%, which was later revised to a lower range of between 3.5% and 4%.

Now, we’re told the notes have been priced to pay investors an initial risk interest spread of 3.5%, so at the low-end of reduced guidance and representing a 20% decline in pricing from the initial mid-point.

Cincinnati Insurance’s return to the catastrophe bond this year has been a successful one, securing its targeted reinsurance protection at a lower price than first envisaged, reflecting the continuing strong appetites for new paper in the cat bond market.

You can read all about this new Skyline Re II Ltd. (Series 2025-1) catastrophe bond and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory.