Global insurance and reinsurance company Everest Re is aiming to upsize its latest catastrophe bond issuance, with the new Kilimanjaro III Re Ltd. (Series 2022-1) transaction now targeting $300 million in industry loss based aggregate retrocession for the company.
In what may be an initial sign that spread widening might be at or near a peak in the catastrophe bond market, we’re now told Everest Re’s new cat bond looks set to have its coupon finalised at the mid-point of initial price guidance.
Everest Re returned to the catastrophe bond market earlier this month with its latest Kilimanjaro Re issuance, seeking $250 million or more in multi-peril retro reinsurance protection from the capital markets.
We’re now told the target size for this issuance is for $300 million of cover.
While this has upsized, Everest Re had around $562 million in cat bonds mature earlier this year, so the company has not replaced all that protection this time around, perhaps unsurprising in the wide-spread environment.
So, this Kilimanjaro Re III cat bond now looks set to provide Everest Re with $300 million of coverage against certain losses from named storms and earthquakes that impact the United States, Puerto Rico, U.S. Virgin Islands, D.C., and Canada.
The retrocessional reinsurance protection will be on an industry-loss trigger basis and the cat bonds are structured to provide Everest Re with a source of annual aggregate retro reinsurance protection, across a three-year term.
The now $300 million of notes offered will have an initial attachment probability of 1.43% and an initial expected loss of 0.9% and they were first marketed to cat bond investors with initial price guidance of 5% to 5.5%.
We’re now told that the price guidance has been fixed at the mid-point of that guidance, for a coupon of 5.25%.
While this is still a relatively high multiple-at-market, compared to recent years of cat bond issues from Everest Re, the fact this deal looks set to price at the mid-point may be a first sign of spread widening slowing in the primary catastrophe bond marketplace.