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Inigo targets second cat bond with $100m Montoya Re 2022-2 issuance


Inigo, the London headquartered specialty insurance and reinsurance underwriter with a Lloyd’s syndicate, has returned to the catastrophe bond market for its second issuance, seeking $100 million or more in aggregate retro reinsurance protection from this Montoya Re Ltd. (Series 2022-2) deal.

inigo-insurance-logoInigo visited the cat bond market for reinsurance protection for the first time earlier this year, securing $115 million of protection from a Montoya Re Ltd. (Series 2022-1) issuance.

This second Montoya Re catastrophe bond is a little narrower in its coverage, with the issuance just seeking North American, including Canada, named storm and earthquake protection for Inigo, we’re told by sources.

Inigo’s Syndicate 1301 at Lloyd’s, will again be the ultimate beneficiary of the coverage from this second Montoya Re cat bond arrangement.

As with the first Montoya cat bond, Hannover Re sits in the middle as a fronting reinsurance entity for this new issuance.

Montoya Re Ltd. will seek to issue a single tranche of Series 2022-2 Class A notes, with a target size of issuance of $100 million or greater, and these will be sold to investors and the proceeds used to collateralize reinsurance agreements between the SPI and Inigo’s Syndicate 1301.

The coverage from this latest cat bond will run a little longer than Inigo’s first as well, we understand, with the risk periods to begin for 2023 and run to the end of March 2026 and the first risk period a relatively short one, just running for the first three months of the deal’s tenure.

The retro reinsurance coverage provided by the Montoya Re 2022-2 cat bond will be across the peak perils of U.S. named storm, U.S. and Canada earthquake.

As with the first Montoya Re cat bond, the transaction features a PCS industry loss index trigger, with coverage provided on an annual aggregate basis.

The $100 million of Class A notes are being marketed with an initial attachment probability of 4.25%, an initial expected loss of 3.18% and are being marketed to investors with coupon price guidance in a range from 13% to 14%, we understand.

It’s a higher-risk deal than the first Montoya Re cat bond, that had a 1.52% expected loss at launch, so the second Montoya Re covers risk lower down in the tower for Inigo.

The multiple-at-market of this new Montoya Re 2022-2 cat bond would be around the 4.25 times expected loss level at the mid-point of price guidance.

It’s encouraging to see Inigo Insurance returning to the catastrophe bond market for a second time in just its first year of leveraging the structure within its retro reinsurance arrangements.

The narrowing of coverage to a US focus only will likely support the company as it looks to grow into hardening markets over the next year as well.

You can read all about this new Montoya Re Ltd. (Series 2022-2) catastrophe bond, the second from Inigo Insurance, as wel as details on every other cat bond issued in our extensive Artemis Deal Directory.

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