The North Carolina Insurance Underwriting Association (NCIUA) is set to significantly upsize its latest catastrophe bond, with what was initially a $350 million Cape Lookout Re Ltd. (Series 2025-1) issuance now targeted to provide almost double that in reinsurance, at a $600 million issuance size, Artemis has learned.
Earlier this month, the North Carolina Insurance Underwriting Association (NCIUA) returned to the capital markets seeking $350 million of annual aggregate named storm reinsurance protection from what will be its seventh catastrophe bond under its Cape Lookout Re Ltd. program of deals.
This new Series 2025-1 cat bond is now targeted to become the largest in the Cape Lookout Re program of deals at $600 million, we’re told, with the previous largest in the series having been $450 million in size.
In fact, this will become the largest cat bond that the NCIUA has ever been a beneficiary of, including the transaction it co-sponsored with the NCJUA which were in 2013 and prior.
With this upsizing on the cards, the NCIUA’s Bermuda-based special purpose insurer (SPI) is now targeting issuance of a single, $600 million, tranche of Series 2025-1 Class A notes, to provide the sponsor with a source of indemnity and annual aggregate reinsurance protection from the capital markets, covering named storm losses across a three year term.
The Cape Lookout Re Series 2025-1 Class A cat bond notes come with an initial expected loss of 2.24% and were first offered with price guidance in a range from 6.75% to 7.25, but we’re now told that the price guidance range has narrowed to between 6.9% and 7.25%.
As we explained in our previous article on this new NCIUA catastrophe bond, the deal will sit at an attachment of $2.8 billion of losses, participating in a layer of the reinsurance tower to $3.4 billion, so as we said there was always a chance it could fill the entire layer, which now looks set to be the case.
As we also said, if this new cat bond does settle at $600 million in size, the NCIUA will benefit from cat bond backed reinsurance protection in its reinsurance tower running from $2.35 billion right the way up to $3.75 billion for the coming hurricane season, thanks to other cat bonds also still in-force.
You can read all about this new Cape Lookout Re Ltd. (Series 2025-1) transaction and every other cat bond ever issued in our Artemis Deal Directory.
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