Hiscox sponsoring first cat bond in over two decades, Ocelot Re Ltd.

Hiscox Group is sponsoring its first catastrophe bond in more than two decades, seeking $100 million or more in peak peril aggregate retrocessional reinsurance from the capital markets through an Ocelot Re Ltd. (Series 2023-1) issuance.

Hiscox was last in the catastrophe bond market back in 2002, when it sponsored the St Agatha Re Ltd. which was the first cat bond for a Lloyd’s syndicate.

Now, the company has returned and has established Ocelot Re Ltd. in Bermuda to secure a fully collateralized source of retro reinsurance for its Bermuda underwriting entity and its Lloyd’s syndicate 33, Artemis understands.

Ocelot Re Ltd. will look to issue a $100 million or greater tranche of Series 2023-1 Class A notes, to provide Hiscox with a multi-year source of US and Canada named storm and earthquake retrocession.

The retrocessional reinsurance protection from this Ocelot Re catastrophe bond will be structured on an annual aggregate and weighted PCS industry-loss trigger basis, we understand, with coverage running across three annual risk periods from calendar year 2024 through 2026.

We’re told there is a $10 billion per-event deductible in place with this deal, meaning a named storm or earthquake won’t qualify to aggregate under this cat bond until the industry-loss reported is above that level.

The $100 million of Ocelot Re Ltd. Series 2023-1 Class A catastrophe bond notes will have an initial attachment probability of 3.53%, an initial expected loss of 2.66% and are being offered to investors with price guidance for a spread of between 8.25% and 9%, we’re told.

The fact a company like Hiscox returns to the catastrophe bond market right now is a clear signal of how attractive conditions are for sponsors comparative to traditional markets, while it’s also clear aggregate retro of this kind may not be readily available in other traditional and collateralized forms anyway.

The way deals have been executing of late is making the catastrophe bond market very attractive right now, which should pull a string of sponsors in through the first-half of 2024.

You can read all about this Ocelot Re Ltd. (Series 2023-1) catastrophe bond from Hiscox and every other cat bond issuance in our extensive Artemis Deal Directory.