Conduit Re, the Bermuda headquartered global reinsurance company that launched for the 2021 underwriting year, has now entered the catastrophe bond market with a debut issuance, sponsoring a $100 million Stabilitas Re Ltd. (Series 2023-1) deal to secure retrocession from the capital markets, we can report.
This news has come to light just days after Conduit Re executives answered Artemis’ question regarding their potential plans for a future catastrophe bond during last week’s earnings call, to which CEO Trevor Carvey said it could soon be “in the pipeline.”
It now transpires that Conduit Re’s debut cat bond was already in the pipeline and we’re now told by sources that a deal launched to investors at the end of last week.
Conduit Re has set up Stabilitas Re Ltd. in Bermuda for the issuance of catastrophe bonds and for its debut the vehicle will target the sale of $100 million of notes to cat bond investors to provide the reinsurance firm a source of capital markets backed retrocession.
This first Stabilitas Re Ltd. cat bond targets a source of both US named storm and US earthquake retrocessional protection for Conduit Re.
The $100 million or more in Series 2023-1 Class A notes that Stabilitas Re will issue for Conduit Re will provide the reinsurer protection on an industry loss trigger and annual aggregate basis, across a roughly three-year term to the end of May 2026, we understand.
We’re told the notes will have an attachment point at $200 million of losses to Conduit Re and cover losses to $300 million, while qualifying events will need to exceed a $10 billion franchise deductible for PCS reported industry losses from named storms or earthquake events.
The $100 million of notes will have an initial attachment probability of 3.86%, an initial base expected loss of 2.7% and are being offered to cat bond investors with price guidance of between 9% and 9.75%, sources said.
It’s encouraging to see this development from Conduit Re, as the reinsurers continues to expand its portfolio and leveraging retrocession from the cat bond market will support the firm’s further expansion.