Pricing falls below guidance on AXIS’ Northshore Re II cat bond


The price guidance for Bermuda-headquartered specialty insurance and reinsurance firm AXIS Capital Holdings Ltd’s Northshore Re II Ltd. (Series 2017-1) catastrophe bond transaction has been reduced again, reflecting the continuing strong investor appetite for new issues.

Just yesterday we reported that AXIS’ latest Northshore Re II cat bond had been upsized by 40%, as its single tranche of Series 2017-1 Class A notes grew from $250 million to $350 million in size while marketing.

At the same time the price guidance had also been narrowed, towards the bottom end of the initial guidance, as the initial 7.5% to 8.5% range tightened down to the lower end at 7.5% to 8%.

But now we’re told that investor demand for the Northshore Re II cat bond has driven the coupon even lower, with the latest price guidance now below the initial range, at 7% to 7.5%.

Once again, this is a reflection of the appetite that catastrophe bond investors have for new issues right now, as the vast majority of cat bonds issued so far, in what is already a record year of 2017 with $9.14 billion of issuance, has seen its pricing fall.

Once completed, AXIS now stands to benefit from $350 million of fully-collateralized reinsurance and retrocession for its subsidiaries, including its Lloyd’s syndicate, insurers and reinsurers, covering industry losses from U.S. named storms, U.S. earthquakes and Canadian earthquakes, on a per-occurrence basis and across a three-year term.

The fact that the pricing has dropped makes the reinsurance coverage provided even more efficient and it’s clear that sponsors are taking advantage of capital market efficiencies to lock in coverage this year.

The Northshore Re II Ltd. (Series 2017-1) catastrophe bond transaction will be completed before the end of next week and you can read details on this and every cat bond transaction in the Artemis Deal Directory.

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