London headquartered and Lloyd’s market focused specialty insurance and reinsurance underwriter Inigo Insurance is now set to complete its first catastrophe bond before the end of the month, with the Montoya Re Ltd. (Series 2022-1) multi-peril catastrophe bond settling at $115 million in size, but with pricing at the top-end of guidance.
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.
The price guidance for the single tranche of notes then rose, but at the same time Inigo Insurance showed it had the appetite to increase the size of the deal.
The targeted size for the single tranche of Series 2022-1 Class A notes to be issued by Montoya Re Ltd. was lifted to between $105 million and $115 million in size.
Inigo has now secured that upper-end target, we understand from sources, with the Montoya Re 2022-1 cat bond now set to secure the company $115 million of industry loss based retrocessional reinsurance.
So, now finalised, Inigo’s debut catastrophe bond will provide its Lloyd’s syndicate 1301 with close to 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, based on a PCS industry loss index trigger.
The Class A notes come with an initial attachment probability of 3.37% and an initial expected loss of 1.52% and they were first offered to cat bond funds and investors with coupon price guidance in a range from 5.5% to 6.25%, but that guidance rose to a range spanning from 6.25% to 6.75% while the deal was marketed.
Clearly investors wanted a higher return from this debut cat bond deal and the pricing has now been finalised at the top-end of that raised guidance, so the now $115 million of Montoya Re 2022-1 notes will pay a 6.75% coupon to investors.
It’s good to see another new sponsor venture into the cat bond market and encouraging that Inigo persisted with the issuance despite the pricing rising.