Direct-to-consumer and fast-growing insurtech Kin Insurance is entering the catastrophe bond market for the first time, seeking $100 million of Florida hurricane reinsurance protection with a Hestia Re Ltd. (Series 2022-1) issuance.
The ultimate beneficiary of the reinsurance coverage and the ceding insurer for this Hestia Re Ltd. catastrophe bond, is Kin Interinsurance Network, the insurtech’s policyholder-owned reciprocal exchange.
Hestia Re Ltd. is a newly registered Bermuda-based special purpose insurer that has been registered for the issuance of series of catastrophe bond notes.
For its debut cat bond issuance, Kin Insurance is seeking $100 million or more of reinsurance protection against losses to its personal property lines portfolio from named storms impacting its key state of Florida.
Hestia Re Ltd. will seek to issue a single Class A tranche of Series 2022-1 catastrophe bond notes and they will be sold to investors, with the proceeds of the sale used to collateralize reinsurance agreements between Hestia Re and ceding insurer the Kin Interinsurance Network.
We understand that the Series 2022-1 notes are being marketed as a $100 million tranche to investors, but we’re told there is room to upsize and that Kin would have the appetite to do so, if pricing and terms were deemed sufficiently attractive.
The Hestia Re Ltd. Series 2022-1 Class A notes will cover a layer of risk attaching at $125 million of losses and exhausting at $325 million, giving room for the transaction to double in size for Kin, if market conditions are conducive.
The currently $100 million of notes to be issued by Hestia Re Ltd. will have an initial attachment probability of 2.71% at the base case, while the initial expected loss is 1.97%. They are being offered to investors with coupon price guidance in a range from 8.75% to 9.5%, we’re told.
Which is a relatively high multiple-at-market being offered, for what is the first pure Florida wind catastrophe bond of 2022, so it will be interesting to see how it is received by investors.
At the moment we’re being told this is likely to settle in April, taking this transaction out of the first-quarter reporting period for the catastrophe bond market. But that could change if appetite is strong enough to close the deal sooner, we understand.
It’s encouraging to see another new sponsor and a high-growth company like Kin turning to the catastrophe bond market to augment its reinsurance arrangements this year.
We expect there will be more new sponsors to come over the next few months, as re/insurers get their protection in place in advance of the 2022 Atlantic hurricane season.
You can read all about this new Hestia Re Ltd. (Series 2022-1) catastrophe bond from Kin and every other cat bond deal issued in our extensive Artemis Deal Directory.
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