Louisiana Citizens $100m Pelican IV Re 2018 follows cat bond price trend (down)


The latest catastrophe bond from Louisiana Citizens Property Insurance Corporation looks set to follow the market trend in 2018, as the price guidance gets reduced, falling below the initial marketed range for its $100 million Pelican IV Re Ltd. (Series 2018-1) cat bond.

Louisiana Citizens returned to the cat bond market recently, seeking what will be its first multi-peril source of collateralized reinsurance from the cat bond market.

For the property insurer of last resort this is its fifth cat bond and the Pelican IV Re 2018-1 deal, while broadening the reinsurance coverage that Louisiana Citizens receives from the capital markets is also set to do so at very attractive pricing.

Louisiana Citizens special purpose insurer (SPI) Pelican IV Re Ltd. is set to issue a single $100 million tranche of Series 2018-1 Class A notes, which will provide the sponsor with reinsurance protection against losses from Louisiana named storms (so tropical storms and hurricanes) and also Louisiana severe thunderstorms, across a three-year term on a per-occurrence basis and using an indemnity trigger.

Previous Louisiana Citizens cat bonds have solely covered named storm risks, so it is encouraging to the see the insurer looking to the capital markets for a more holistic layer of protection this time around.

The single $100 million tranche of Series 2018-1 Class A notes, which have an initial expected loss of 0.97%, were launched to investors with coupon price guidance of 2.25% to 2.75%.

But now, following the trend of almost every catastrophe bond launched this year, the Pelican Re IV 2018 notes are set to price down, we understand, with the coupon guidance now lowered to below the initial range, at 2% to 2.25%.

It’s further evidence of the appetite the capital markets has for catastrophe risk in securitized form currently, which should continue to drive brisk issuance through the rest of the quarter and provide efficient execution for sponsors seeking reinsurance or retrocession from the capital markets.

You can read all about the Pelican IV Re Ltd. (Series 2018-1) cat bond and every other catastrophe bond transaction since the inception of the market in the Artemis Deal Directory.

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