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Citizens Everglades Re II 2018-1 cat bond grows to $250m at low-end of pricing


Florida’s Citizens Property Insurance Corporation’s latest catastrophe bond, the Everglades Re II Ltd. (Series 2018-1) transaction, has upsized before pricing to $250 million, while the coupon has now been fixed at the low-end of initial guidance.

Florida Citizens returned to the catastrophe bond market with its latest issuance a few weeks ago, with an offering that was first marketed at $200 million in size, as the insurer looked to its sixth cat bond issuance to secure additional Florida named storm, so tropical storm and hurricane, reinsurance protection for its coastal account exposures.

At a Board meeting yesterday, Florida Citizens discussed the make-up of its reinsurance placement for the 2018 renewal and it was decided that the cat bond would contribute $250 million of the overall $1.42 billion of risk transfer that the insurer will aim to secure.

The $250 million of notes being issued by Everglades Re II Ltd. will provide Florida Citizens with a fully collateralized source of annual aggregate reinsurance protection against losses from Florida named storms (so the impacts of tropical storms and hurricanes), using an indemnity trigger based on Citizens loss experience, covering a three-year term.

The Everglades Re II 2018-1 cat bond will provide its $250 million of reinsurance protection across a layer of risk almost $900 million wide, attaching at $1.735 billion and covering a percentage of losses up to $2.615 billion alongside traditional reinsurance and already in-force catastrophe bonds from 2017.

Pricing has now been fixed for the upsized $250 million of notes that are being issued.

The Class A notes, which have an initial expected loss of 1.93%, were launched to cat bond investors with price guidance in a range from 4.75% to 5.25%, but that range subsequently narrowed towards the lower end at 4.75% to 5%.

We’re now told that Florida Citizens achieved the lowest end of pricing, with the $250 million of Class A notes priced at 4.75% yesterday.

With its latest cat bond transaction, Florida Citizens will enter the 2018 hurricane season with $550 million of catastrophe bond backed reinsurance coverage in-force, out of its total $1.42 billion program for the year.

The capital markets continue to make up a valuable component of the insurers protection and with pricing achieved at keen levels, despite the major hurricane losses the state of Florida suffered from Irma, the coverage remains an efficient source of protection for Citizens.

Visit the Artemis Deal Directory to read all about this Everglades Re II Ltd. (Series 2018-1) catastrophe bond.

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