The Massachusetts Property Insurance Underwriting Association (MPIUA) has now secured the top-end target for its new Mayflower Re Ltd. (Series 2023-1) catastrophe bond, to provide it $250 million in collateralized reinsurance, we understand.
At the same time, the pricing has now been finalised, with one tranche now priced at the mid-point of initial guidance, the other slightly riskier layer a little above the original guidance range.
This Mayflower Re 2023-1 catastrophe bond is the first to be issued for the Massachusetts MPIUA since 2017 and takes the total we have tracked for the residual market property insurance association, or FAIR Plan, for the Commonwealth of Massachusetts, to four MPIUA cat bond deals since 2010.
This Mayflower Re 2023-1 cat bond will provide a source of indemnity based and annual aggregate named storm, severe thunderstorm and winter storm reinsurance protection to the MPIUA over a three-year term to the end of June 2026, with global reinsurer Hannover Re facilitating it by fronting the capital markets for the insurance association.
The Class A tranche of notes were initially sized at $75 million, but we’re told are now pitched at a larger $100 million in size.
With their initial base expected loss of 1.084%, the Class A notes were first marketed to investors with spread price guidance in a range from 4.25% to 4.75%, but we’re now told that this has been updated and fixed at 4.5%.
Meanwhile, the Class B tranche of notes were at first sized at $100 million, but we’re now told are a $150 million offering.
The slightly riskier Class B notes have an initial base expected loss of 1.598% and were first marketed to investors with spread price guidance in a range from 5% to 5.5%, but we’re now told this has been fixed above that range, for a spread of 5.75%.
We’re told these are now the finalised sizes and spreads for the two tranches of notes.