The first catastrophe bond sponsored by the Netherland’s based insurer NN Group, or Nationale-Nederlanden, remains on target to secure the company EUR 75 million of collateralised reinsurance, while the price guidance for the Orange Capital Re DAC (Series 2021-1) notes has narrowed towards the lower-end.
NN Group is a life and property-casualty underwriter based in the Netherlands and that largely underwrites risks in that country and those close to it.
The company entered the catastrophe bond market for the first time around a fortnight ago, with the Orange Capital 2021-1 cat bond set to provide the ceding company NN Re, which is the Nationale-Nederlanden internal reinsurance vehicle, a source of multi-peril reinsurance protection sourced from capital market investors.
NN Group is using Ireland as the domicile for this cat bond, possibly for Solvency II reasons, with Orange Capital Re Designated Activity Company (DAC) established there to issue catastrophe bond series and notes.
Orange Capital Re (DAC) continues to target issuance of a EUR 75 million (approx. US $85m) tranche of Series 2021-1 Class A notes, that will ultimately provide NN Group with a source of multi-year collateralised reinsurance against losses from European windstorms and severe thunderstorms, across a covered area of the Netherlands and Belgium, so not a full Europe-wide cat bond.
The reinsurance protection is structured on an indemnity trigger and per-occurrence basis, and the coverage will run across a three-year period to early January 2025.
The still EUR 75 million tranche of Class A notes come with an initial expected loss of 2.02% and the notes were first offered to cat bond investors with price guidance in a range from 3.25% to 3.75%.
We’re now told that that guidance has narrowed and fallen, with the notes offered with a 3.25% to 3.5% coupon now.
So, it appears NN Group will at least secure the targeted EUR 75 million of catastrophe reinsurance at the mid-point of initial pricing, perhaps lower, which will be a good result for the company in this hardening reinsurance market.
We’re told the notes will be priced later this week and completion of this cat bond issuance is scheduled for just before the end of the year.
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