Gothaer targets slightly lower pricing for €100m Yardstick Re flood catastrophe bond

German insurer Gothaer Allgemeine Versicherungs AG is now targeting a slight reduction in pricing for its debut catastrophe bond, while the goal remains to secure €100 million of reinsurance limit to cover flood events in Germany with the Yardstick Re DAC (Series 2026-1) issuance, Artemis understands.

Gothaer Allgemeine Versicherungs AG (Gothaer), a non-life property and casualty focused insurance company focused on private client and business coverage and part of the BarmeniaGothaer Group, entered the catastrophe bond market for the first time earlier this month.

It’s debut issuance, this Yardstick Re 2026-1 cat bond, is the first catastrophe bond to ever come to market solely focused on flood risks in Germany.

The target size of this cat bond has not changed during the now almost 20 days it has been in the market, remaining a €100 million source of collateralized flood reinsurance protection, but the spreads on offer have declined slightly and opened out to a narrow range.

Remember that the pricing of this cat bond was particularly low anyway at launch, given the risk is extremely remote in expected loss terms for a property cat bond.

So, Yardstick Re DAC continues to offer a €100 million tranche of Series 2026-1 Class A notes to investors, designed to provide insurer Gothaer with four years of reinsurance protection to cover losses from major flood events in German on an indemnity trigger and per-occurrence basis.

The still €100 million of Series 2026-1 Class A notes being offered by Yardstick Re DAC have an initial expected loss of 0.19% and were first offered to investors with price guidance for a risk interest spread of 2%.

Now, we’re told that the guidance has opened up into a narrow range, at an updated 1.95% to 2% spread.

It’s only a slight reduction in price guidance, but then it did not have far to fall given how thin the spread was in the initial offering.

While this is a remote risk for a property catastrophe bond and a rare rated issuance as a result, the majority of investors in the catastrophe bond asset class will have minimum return requirements and such a thin spread won’t be attractive to everyone, meaning there is not much lower it could possibly go, we suspect.

But, for debut catastrophe bond sponsor Gothaer, it does imply a chance of securing its targeted flood reinsurance limit at lower than anticipated pricing, which would be a good result for the insurer on its first visit to the cat bond market.

You can read all about this Yardstick Re DAC (Series 2026-1) transaction and every other catastrophe bond deal in our extensive Artemis Deal Directory.