NCJUA upsizes Longleaf Pine Re cat bond to $145m, priced 9% above mid-guidance

The North Carolina Joint Underwriting Association (NCJUA) has successfully secured an upsized $145 million in aggregate named storm reinsurance from its new Longleaf Pine Re Ltd. (Series 2024-1) catastrophe bond issuance, but its first cat bond since 2013 is now set to price at the top-end of raised guidance, Artemis understands.

As we said in our last article on this Longleaf Pine Re deal from the NCJUA, it is just the latest primary cat bond issuance to price higher, reflecting the fact cat bond investors appear to have reached the end of their appetite to soften pricing.

It is also reflective of widening spreads and an investor requirement for sufficient returns, at this time, which we covered in more detail here and also reported on as the overall yield of the cat bond market rose in recent weeks.

The sponsor of this Longleaf Pine Re 2024-1 cat bond is the North Carolina Joint Underwriting Association (NCJUA), which is also known as the FAIR (Fair Access to Insurance Requirements) Plan.

It is a tax exempt association of insurance companies licensed to write and engage in writing property insurance coverage in the state of North Carolina.

When this first catastrophe bond from Longleaf Pine Re Ltd. first came to market, the NCJUA was initially seeking at least $125 million in protection against named storm losses in its home state, on an indemnity trigger and annual aggregate basis.

As we later reported, the target was increased slightly, with up to $140 million in reinsurance then being sought by the NCJUA, while at the same time the price guidance was raised above the initially offered range.

Now, sources tell us that this catastrophe bond will price to provide the NCJUA with $145 million in collateralized and multi-year named storm reinsurance, so above the raised target from the first update on this deal.

Which is good to see, especially as the notes are set to price at the top-end of elevated guidance.

The confirmed to be $145 million of Longleaf Pine Re 2024-1 cat bond notes come with an initial expected loss of 5.68% and were initially offered to cat bond investors with price guidance in a range from 15% to 17%.

When the price guidance and size target then rose, the notes were being offered with updated price guidance from 17% to 17.5%, so pricing looked set for the top-end of initial guidance or even higher.

Now, we understand that pricing of the $145 million Longleaf Pine Re 2024-1 cat bond notes will be finalised at 17.5%, so above the initial guidance and representing a roughly 9% increase from the mid-point of the first price guidance range.

So despite the price rising, it is encouraging to see that the NCJUA opted to upsize on the coverage this catastrophe bond will provide to it, demonstrating another sponsor with an appetite to maximise its use of capital markets capacity this year.

You can read all about this new Longleaf Pine Re Ltd. (Series 2024-1) catastrophe bond and every other cat bond issued in the extensive Artemis Deal Directory.