Fidelis set to triple new Herbie Re cat bond to $150m in size

Specialty insurance and reinsurance company Fidelis Insurance Holdings Limited has tripled its target for its latest catastrophe bond, with the worldwide multi-peril protection from its Herbie Re Ltd. (Series 2021-1) looking set to grow to $150 million.

Fidelis returned to the catastrophe bond market for its third transaction earlier this month, with a new Herbie Re cat bond through which the company is seeking to significantly expand the range of covered perils and territories included, to provide broader retrocessional reinsurance protection.

This third Herbie Re catastrophe bond from Fidelis will be one of the broadest, in terms of the range of perils and regions of the globe covered, making it almost a worldwide multi-peril deal, with practically all the major insurance and reinsurance industry peak perils included.

At launch of the deal, Fidelis was seeking just $50 million of retro reinsurance protection from this Herbie Re 2021-1 cat bond.

But now, we’re told that thanks to strong investor demand the transaction is set to triple in size, with the target now set at $150 million of notes to be issued.

So, Herbie Re Ltd., Fidelis’ Bermuda-domiciled special purpose insurer (SPI), will look to issue a single now $150 million tranche of Series 2021-1 Class A notes.

The notes will provide Fidelis with annual aggregate and industry loss index basis, across a four-year term and four individual annual risk periods to the end of May 2025.

The perils and regions Fidelis will benefit from coverage for are: North America (inc. Canada) named storm, North America (inc. Canada) earthquake, US severe thunderstorm, US wildfire, US winter storms, US Caribbean earthquake, Japan typhoon, Japan earthquake, Canada severe storm, Canada winter storm, European windstorm, Italy earthquake, Turkey earthquake, Australia earthquake, Australia tropical cyclone, NZ earthquake.

Every peril covered features a franchise deductible, while there are coverage caps for North America named storm and earthquake, as well as US Caribbean quake risks.

As said, this is a particularly “worldwide” cat bond deal and it shows other major retro buyers that the catastrophe bond market can offer a way to secure industry-loss triggered coverage for practically all the major insured peak peril zones through a single layer of coverage in an efficient manner.

The now $150 million of Series 2021-1 Class A notes will have an initial expected loss of 7.32% and were first offered to investors with price guidance in a range from 17.75% to 18.5%. We’re told the price guidance has now fallen, to a new range of 17.25% to 17.75%, indicating continued strong investor demand for new cat bonds and ongoing spread tightening in the market.

So Fidelis’ latest deal looks set for another example of strong execution in the catastrophe bond market, while the worldwide all perils coverage is a clear demonstration that the cat bond market can provide this type of broad coverage to large retro and reinsurance buyers.

We’ll keep you updated as this Herbie Re Ltd. (Series 2021-1) catastrophe bond comes to market and you can read about this and every other cat bond deal in the Artemis Deal Directory.