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GeoVera’s debut Veraison Re cat bond still on-track, but at higher pricing

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Specialty earthquake-focused residential property insurance company GeoVera Insurance Holdings, Ltd.  is still on-track to sponsor its first catastrophe bond, but the $150 million Veraison Re Ltd. (Series 2023-1) deal has seen some changes to terms around extension spreads and its price guidance has risen, we’re told.

geovera-insurance-logoGeoVera, a fast-growing catastrophe exposed property and quake focused primary writer, entered the catastrophe bond market for the first time back in early November.

The insurer was seeking $150 million of fully-collateralized, per-occurrence and multi-year US earthquake reinsurance cover with the first Veraison Re cat bond issuance, but the process has been a little slow, which we understand was while the company took feedback from the market and its investors.

We’re told that some adjustments have now been made to the terms of the cat bond deal, in areas such as extension spreads, bringing it into line with other recent cat bonds. As a result of which, the pricing and settlement dates have been pushed back a little.

But GeoVera is persisting with this, its first cat bond sponsorship, which is encouraging to see.

The price guidance for both tranches of notes being issues have been raised, we understand, but we understand the size remains targeted for $150 million, or just slightly under that depending on investor appetite.

Veraison Re Ltd. is still targeting issuance of a $75 million tranche of Class A notes that come with an initial expected loss of 0.65%. The Class A notes were first offered to investors with coupon guidance of 6% to 6.5%, but we’re now told that guidance has risen to the upper-end, at 6.5%.

The Class B tranche of notes are now being marketed as between $70 million and $75 million in size. This tranche of notes come with an initial expected loss of 2.91% and were first offered to investors with coupon price guidance of 9.75% to 10.5%, but we’re now told this has been lifted to 12%, so a more considerable price increase for this riskier layer of the Veraison Re cat bond deal.

We’re told there is unlikely to be much change in this cat bond now, with pricing set for later this week. We are told it is expected to achieve the $150 million target size, with pricing at these now elevated levels.

You can read all about this Veraison Re Ltd. (Series 2023-1) in the extensive Artemis Deal Directory that includes details on almost every cat bond ever issued.

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