Heritage returns with $250m target for new Citrus Re 2026-1 named storm cat bond

Heritage Insurance Holdings, Inc., a nationally expansive US property and casualty insurer headquartered in Florida, is back in the catastrophe bond market again with an initial target to secure $250 million or more in collateralized US named storm reinsurance from a Citrus Re Ltd. (Series 2026-1) issuance, Artemis has learned.

Heritage Insurance Holdings has been accessing the capital markets to source reinsurance in catastrophe bond format since 2014, when it sponsored its first Citrus Re cat bond.

This new Citrus Re Ltd. Series 2026-1 catastrophe bond issuance will be the eleventh cat bond under the Citrus Re name that Heritage has sponsored and we have listed in our extensive cat bond Deal Directory.

At this time, Heritage Insurance has $535 million of catastrophe bond risk capital outstanding across three Citrus Re transactions, according to our cat bond sponsor leaderboard.

But with $235 million of that scheduled to mature before the 2026 hurricane season, from the Citrus Re Ltd. (Series 2023-1) issuance, Heritage has returned to bolster its capital markets backed reinsurance from the cat bond market again.

For this its eleventh Citrus Re cat bond sponsorship, Heritage is targeting named storm reinsurance for its Heritage P&C Insurance Company, Narragansett Bay Insurance Company (NBIC) and Zephyr Insurance underwriting entities, we understand.

As a result, the coverage area is largely in the US northeast for Heritage P&C and Narragansett Bay, as well as the inclusion of Hawaii for Zephyr in just one of the tranches of notes.

Citrus Re Ltd., Heritage’s special purpose insurer (SPI) in Bermuda, is targeting issuance of two tranches of Series 2026-1 notes, that will be sold to investors and the proceeds used to collateralize reinsurance agreements for the ceding entities.

The Citrus Re Series 2026-1 cat bond notes are targeted to provide Heritage and its subsidiaries with a multi-year source of US named storm reinsurance protection across the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island and Virginia, as well as Hawaii, on an indemnity trigger and per-occurrence basis, across a three-year term from June 1st 2026 to May 31st 2029, we understand.

A $100 million tranche of Class A notes will cover named storm risks across the mentioned US states, but not Hawaii. They will attach at $290 million of losses after stated reinsurance, exhausting their reinsurance coverage at $450 million, giving them an initial attachment probability of 2.87%, an initial expected loss of 2.5% and these notes are being offered to investors with spread guidance in a range from 5.25% to 5.75%, sources said.

A $150 million Class B tranche of notes will cover named storm risks across the mentioned US states and also Hawaii. They will attach at $290 million of losses and exhaust their reinsurance coverage at $440 million, but with differences to the stated reinsurance inuring to them they are riskier, having an initial attachment probability of 3.6%, an initial expected loss of 3.32% and these notes are being offered to investors with spread guidance in a range from 6.75% to 7.25%, we are told.

Given there are differences in stated reinsurance that inures to each tranche of notes, their effective attachment points will differ from the figures cited above.

It’s encouraging to see Heritage returning for what will be its eleventh Citrus Re catastrophe bond. This year’s issuance targets relatively keen pricing from the start, so it will be interesting to see where these notes price for the insurer.

You can read all about this Citrus Re Ltd. (Series 2026-1)  catastrophe bond and every other cat bond issued in our extensive Artemis Deal Directory.