Inigo Insurance, the London headquartered and Lloyd’s market focused specialty insurance and reinsurance underwriter, is now targeting an upsize for its Montoya Re Ltd. (Series 2022-1) multi-peril catastrophe bond, which we’re told could grow to provide as much as $115 million in reinsurance for the company.
Inigo Insurance registered Montoya Re Ltd. as a special purpose insurer in Bermuda for the purpose of issuing catastrophe bonds and for its first issuance, Montoya Re was seeking to issue and sell to investors a $105 million or larger tranche of Series 2022-1 Class A notes.
As we reported yesterday, the price guidance for the single tranche of notes had risen and we now understand that pricing is set to be finalised at the top-end of raised and revised guidance, but that Inigo Insurance still has the appetite to increase the size of the deal.
The tranche of Series 2022-1 Class A notes to be issued by Montoya Re Ltd. are now targeted at between $105 million and $115 million in size, we’re told.
The cat bond is designed to provide Inigo’s Lloyd’s syndicate 1301 with roughly three years of annual aggregate retrocessional reinsurance protection, to the end of March 2025, covering multiple international peak perils of U.S. named storm, U.S. and Canada earthquake, Japan earthquake, and Japan typhoon, using a PCS industry loss index trigger.
The Class A notes have an initial attachment probability of 3.37% and an initial expected loss of 1.52% and were first offered to cat bond funds and investors with coupon price guidance in a range from 5.5% to 6.25%.
The pricing was deemed not to be sufficient though and as we reported yesterday the spread guidance was updated and raised to a range from 6.25% to 6.75%.
We’re now told that the pricing has been fixed at the top-end of that raised guidance, with a 6.75% coupon seen as the likely outcome.
Hence, it’s encouraging that Inigo would try to upsize on the cat bond, despite pricing for the reinsurance coverage having come out above initial expectations.
It shows a strong commitment to the cat bond market from this new sponsor, which investors and fund managers will appreciate.