Hamilton Insurance Group has returned to renew its catastrophe bond and we’re told by sources is looking to upsize on the protection it provides, seeking $250 million or more in collateralized multi-peril retrocessional reinsurance from an Easton Re Ltd. (Series 2027-1) transaction.
Hamilton Insurance Group, the Bermuda based insurance and reinsurance holding company, first entered the catastrophe bond market back in 2020, when it sponsored the $150 million Easton Re Pte. Ltd. cat bond out of Singapore.
The company returned in late 2023 and secured $200 million of protection from its second issuance, the Easton Re Ltd. (Series 2024-1) which was sponsored using a Bermuda-based issuer.
With that Easton Re 2024-1 catastrophe bond scheduled to mature in early January 2027, we understand that Hamilton is back and looking to grow its cat bond protection while renewing it for a further three years.
The company is again using its Bermuda based special purpose insurer (SPI) Easton Re Ltd. for what will become its third cat bond sponsorship.
Easton Re Ltd. is offering cat bond investors a single Class A tranche of Series 2027-1 notes, we are told, which are designed to provide Hamilton at least $250 million of collateralized retrocession from the capital markets.
Like previous Easton Re cat bonds, we understand that this new Easton Re 2027-1 issuance will provide the sponsor broad retrocessional reinsurance to its reinsurer Hamilton Re, the group’s Lloyd’s managing agency and so syndicate 4000, as well as its US Hamilton Select entity, Irish domiciled carrier and other entities of the group.
The currently $250 million of Easton Re 2027-1 cat bond notes will be exposed to losses from U.S., DC, Puerto Rico, and Virgin Islands named storms, as well as U.S. and Canada earthquakes, on a weighted industry loss trigger and per-occurrence basis, we are told, with that protection set to run for three years from the start of 2027 to maturity in early 2030.
The notes would attach their coverage at 470m points on the industry loss index, exhausting at 850m points. While this doesn’t translate to actual industry loss quantum, it is helpful to know the width of the layer protected against, versus the retention underneath (on an industry loss index point basis).
The targeted $250 million of Series 2027-1 Class A notes that Easton Re is offering come with an initial attachment probability of 4.23%, an initial expected loss of 2.66% and are being offered to cat bond investors with spread price guidance in a range from 4.75% to 5.25%, sources explained.
We can compare this price indication to Hamilton’s 2024-1 cat bond which had an initial expected loss of 2.65% and priced to pay a spread of 7.5%, as well as the 2020-1 cat bond which had an initial expected loss of 1.48% and priced to pay investors a spread of 4%.
The 2027-1 offering would pay a multiple-at-market of 1.88 times expected loss if it priced at the mid-point of guidance. For comparison, the 2024 cat bond which was issued during the hard market had a multiple of 2.83X and the 2020 cat bond (issued when cat bond spreads were generally higher than today) had a multiple of 2.7X.
It’s encouraging to learn that Hamilton is looking to continue its catastrophe bond coverage and to upsize on it, targeting its largest cat bond sponsorship ever with this new deal.
You can read all about this Easton Re Ltd. (Series 2027-1) catastrophe bond transaction in our extensive Deal Directory.
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