The North Carolina Insurance Underwriting Association (NCIUA) is now aiming to secure up to $600 million of annual aggregate named storm reinsurance protection from its Cape Lookout Re Ltd. (Series 2026-1) catastrophe bond, while the price guidance has been lowered for both tranches of notes on offer, Artemis can report.
The North Carolina Insurance Underwriting Association was initially seeking $400 million or more in multi-year and fully-collateralized protection from this Cape Lookout Re 2026-1 deal, when the deal first emerged back at the middle of February.
A year ago, the North Carolina Insurance Underwriting Association (NCIUA) secured its largest catastrophe bond ever, a $600 million Cape Lookout Re 2025-1.
As we’ve explained before, last year’s cat bond from the NCIUA was also notable as it became the very first cat bond to include an additional resilience feature embedded in its terms, which we said at the time represented the first and only example of an insurance-linked securities (ILS) deal that also classifies as a true resilience bond. This new 2026-1 issuance contains the same resilience features.
And now it appears that the NCIUA looks to carry on that momentum within the cat bond space, by seeking another potential $600 million source of protection with this Cape Lookout Re 2026-1 issuance.
The two tranches of Cape Lookout Re Series 2026-1 notes that are on offer are designed to provide the NCIUA with indemnity and annual aggregate reinsurance protection from the capital markets, covering losses from named storms.
As we explained in a previous article, the cat bond notes will have a three year term to protect the NCIUA across three annual aggregate risk periods up to a date in March 2029, and as with other recent Cape Lookout Re cat bonds, qualifying loss events must exceed a $25 million or greater ultimate net loss impact to the insurer of last resort in order to count towards the aggregated totals for each tranche of notes.
What was a $100 million tranche of Cape Lookout Re Series 2026-1 Class A cat bond notes, are now being offered at between $275 million to $300 million in size, we understand.
These Class A notes will sit at an attachment of $2.95 billion of losses, participating in a layer of the reinsurance tower to $3.25 billion, giving them an initial attachment probability of 2.19%, an initial expected loss of 2.04%.
The notes were originally offered to cat bond investors with price guidance of 5.5% to 6%, but sources have now told us that price guidance has been reduced to between 5.25% to 5.75%.
A still $300 million tranche of Cape Lookout Re Series 2026-1 Class B notes will sit at an attachment of $2.65 billion of losses, participating in a layer of the reinsurance tower to $2.95 billion, giving them an initial attachment probability of 2.57%, an initial expected loss of 2.37%.
The notes were offered to cat bond investors with price guidance in a range from 6.25% to 7%, but we are now told the guidance has been reduced to a tighter spread of 6% to 6.5%.
All of which suggests that the North Carolina Insurance Underwriting Association is on-track to potentially secure another $600 million catastrophe bond issuance, and at lower pricing than the initial guidance.
As a reminder, you can read all about this new Cape Lookout Re Ltd. (Series 2026-1) transaction and every other cat bond ever issued in our Artemis Deal Directory.
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