The Integrity Re Ltd. (Series 2019-1) catastrophe bond transaction, which is the latest from Florida based American Integrity Insurance Company, has shrunk in size to offer the firm $50 million of reinsurance protection at the top-end of initial pricing.
American Integrity returned to the catastrophe bond market in recent weeks, seeking its third slice of fully collateralized reinsurance protection through the Integrity Re Ltd. special purpose insurance vehicle, which is Bermuda domiciled.
At launch of the transaction, American Integrity was aiming for $75 million of reinsurance protection from its new cat bond.
The target size was then changed to a range of between $50 million and $75 million, as demand from investors were seen likely to undershoot the original ambitions of the issuance.
Now, we’re told the final size has been secured at just $50 million, so the lower-end of the reduced ambitions from the insurer.
The Integrity Re 2019-1 cat bond issuance will feature a single tranche of $50 million Class A Series 2019-1 notes which will be sold to investors and the proceeds used to collateralize a reinsurance arrangement for American Integrity, via ceding reinsurer Hannover Re.
The reinsurance coverage provided by the cat bond will be across a four-year term, offering protection against certain Florida named storm and severe thunderstorm losses on an indemnity trigger, per-occurrence and cascading basis.
The single tranche of Class A notes being issued by Integrity Re Ltd., with their initial expected loss 1.14%, where pitched to cat bond investors with initial price guidance in a range from 4.25% to 4.75%.
At final pricing, as well as shrinking to a $50 million issuance, the coupon has been fixed at 4.75%, we’re told.
Alongside Safepoint’s Manatee Re III cat bond and also United’s latest Armour Re cat bond, these Florida wind exposed catastrophe bonds are struggling to achieve the size and pricing that sponsors were looking for in 2019.
After the losses faced and the significant loss creep experienced following recent year’s hurricanes that struck the state of Florida, it seems cat bond funds and investors are standing their ground in demanding higher rates and returns for new issuance.
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