Price guidance narrows for Allianz’s €250m Blue Sky Re cat bond

Having returned to the catastrophe bond market last month, global insurance giant Allianz is still on track to secure at least €250 million in European windstorm reinsurance protection with its Blue Sky Re DAC (2023-1) cat bond issuance, while the price guidance has been narrowed towards the upper-end of the marketed range.

While Allianz features numerous times in our extensive catastrophe bond Deal Directory, the last time it sponsored a cat bond for its own reinsurance needs was back in 2013, with more recent issues having been for its Allianz Risk Transfer division to provide retrocession for some of the risk it fronted for ILS funds.

So it was encouraging to see Allianz return in November, with a €250 million target for European windstorm reinsurance from this Blue Sky Re 2023-1 cat bond.

Blue Sky Re DAC is still on track to issue €250 million of notes that will provide capital markets backed reinsurance to cover the Allianz group companies against European windstorm losses, on a weighted industry loss trigger and per-occurrence basis, across three calendar years from January 1st 2024, to the end of 2026.

The target size has not changed, we are told, with still €250 million of notes on offer at this time.

But the pricing guidance has been narrowed, as Allianz targets best execution.

The €250 million of notes that Blue Sky Re DAC will issue, have an initial expected loss of 2.14% and were initially offered to cat bond investors with price guidance for a spread of between 5% to 5.75%.

We’re now told that risk spread guidance has been narrowed to a range of 5.5% to 5.75%, so towards the upper-end of the initial range.

As we said, it appears Allianz is targeting best execution for this new cat bond, balancing its appetite for protection with the pricing of the deal.

You can read all about this new Blue Sky Re DAC (2023-1)  catastrophe bond from Allianz in the Artemis Deal Directory.