Liberty Mutual prices eleventh Mystic Re cat bond for upsized $150m reinsurance

Liberty Mutual Insurance has now secured an upsized $150 million of catastrophe reinsurance limit from its new Mystic Re IV Ltd. (Series 2026-1) catastrophe bond, while the two tranches of notes being placed have both been priced below their mid-points of guidance, Artemis understands.

Liberty Mutual returned to the cat bond market in November, seeking to sponsor what will be the eleventh catastrophe bond in its long-standing Mystic Re series of deals.

In recent years, Liberty Mutual has sponsored one cat bond each December, layering capital markets backed catastrophe reinsurance within its tower, while also staggering the multi-year coverages maturities at the same time.

View details of every catastrophe bond sponsored by Liberty Mutual in our Deal Directory, where you can filter the results by trigger type and other features.

When this deal was first launched, Liberty Mutual was aiming to secure at least $125 million of indemnity based, multi-peril catastrophe reinsurance protection from the capital markets from an issuance of three tranches of Series 2026-1 notes.

In our first update on this cat bond deal we reported that the two lower risk tranches remained but that a higher-risk tranche of notes was no longer set to be issued.

At the same time, Liberty Mutual’s target for catastrophe reinsurance across the remaining two tranches was revised to between $120 million and $150 million.

Now, we’ve learned that the notes have been successfully priced for the remaining two tranches that Mystic Re IV will issue and both have been upsized to the top-end of Liberty Mutual’s targets, resulting in $150 million of catastrophe reinsurance limit having been secured for the company.

As a result, we now know that the two tranches of Mystic Re IV 2026-1 cat bond notes will provide Liberty Mutual with $150 million of reinsurance protection against losses from named storms, earthquakes, severe weather and wildfires on an indemnity trigger and per-occurrence basis from all three tranches, with the covered area being the US, Canada and the Caribbean, over a three calendar year term, from January 1st 2026 to the end of 2028.

What was initially a $40 million tranche of Class A notes were upsized to provide $50 million of reinsurance and come with an initial expected loss of 1.42%. The Class A notes were first offered with spread price guidance in a range from 3.25% to 3.75%, which was revised to the low-end at 3.25% and that is now where they have been priced, so at the low-end of initial guidance, sources said.

What was a $60 million Class B tranche were upsized to provide $100 million of reinsurance and come with an initial expected loss of 3.62%. These notes were first offered with spread price guidance in a range from 6.75% to 7.25%, which was revised to 6.9% and have now priced at that level, so in the lower-half of initial guidance.

With Liberty Mutual’s $150 million Mystic Re IV 2023-1 cat bond scheduled to mature in early January, it’s now clear that the expiring capital markets backed catastrophe reinsurance limit will be fully-replaced by this eleventh cat bond in the Mystic Re series.

As a result, Liberty Mutual will go through the next year with a stable $775 million of its reinsurance tower supported by its Mystic Re catastrophe bonds.

You can read all about this Mystic Re IV Ltd. (Series 2026-1) catastrophe bond from Liberty Mutual and every other cat bond issued in the Artemis Deal Directory.