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Price guidance drops for Citizens new Everglades Re II 2017 cat bond


The coupon price guidance has been lowered on Florida’s Citizens Property Insurance Corporation’s latest catastrophe bond transaction, the Everglades Re II Ltd. (Series 2017-1) deal, signalling continued strong appetite for new risk from investors despite the recent brisk issuance.

Florida Citizens returned to the cat bond market earlier this month, launching what will be its fifth Everglades Re issuance.

At launch the Everglades Re II 2017-1 cat bond was $250 million in size and we understand from sources that so far this has not been increased, so at this stage the deal looks to be progressing without upsizing.

However we should note that other Citizens cat bonds have done the same and then increased in size at the close, once the insurer has established pricing in both traditional and alternative reinsurance markets, so it’s still too early to definitively say it will complete at this size.

This Everglades Re II 2017-1 cat bond transaction will provide Florida Citizens with a source of collateralized reinsurance protection against losses from Florida named storms across a three-year term. The reinsurance will be on an annual aggregate basis, with the cat bond featuring an indemnity trigger and the covered insurance business is from Citizens coastal account, consisting of both personal and commercial residential property exposures.

The single, $250 million tranche of Class A notes being issued by Everglades Re II 2017-1 were initially offered to ILS and cat bond investors with coupon price guidance in a range from 5% to 5.75%.

Now, we understand, that this guidance has been reduced, with the latest information being that the notes are now offered to investors with pricing guidance in a reduced and narrowed range from 5% to 5.25%.

At that level this will be perhaps the most efficient layer of catastrophe bond backed reinsurance cover that Florida Citizens has benefitted from, as the capital markets continue to support the insurers (shrinking, as it downsizes) need for reinsurance protection.

This latest catastrophe bond from Florida Citizens is expected to complete in early May. We’ll update you once final terms and deal size are known.

Update: This deal grew to $300 million in size later in the day.

You can read about this new Everglades Re II Ltd. (Series 2017-1) cat bond transaction and every other catastrophe bond in the Artemis Deal Directory.

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