Progressive raises Bonanza Re 2025-1 aggregate cat bond target again, to $125m

US insurance company Progressive has for a second time lifted the targeted amount of reinsurance protection it is seeking from its latest catastrophe bond, with the Bonanza Re Ltd. (Series 2025-1) issuance now offered to provide it $125 million of aggregate reinsurance for the insurer, we understand from sources.

Progressive returned to the cat bond market in November, initially aiming to secure a $70 million or more one-year source of annual aggregate and multi-peril reinsurance protection from the capital markets.

In a first update on this deal, we reported that the single tranche of discounted zero-coupon notes were raised in size, with Progressive seeking $100 million of protection while the price guidance for the notes had been lowered

Now, we’re told the target size has been raised further, with Progressive now seeking $125 million in aggregate one-year reinsurance from its latest catastrophe bond.

At the same time we understand the pricing has now been fixed at the lower-end of the reduced guidance, which is where it is expected to price later today.

One settled, this will become the ninth in the Bonanza Re series of cat bond deals.

The now $125 million of Series 2025-1 Class A discount zero-coupon cat bond notes that Bonanza Re Ltd. is offering will provide Progressive and certain underwriting subsidiaries with a one year source of aggregate reinsurance covering qualifying losses from named storm, earthquake (fire-following only), severe thunderstorm, winter storm and wildfire across the United States, running across calendar year 2026.

The $125 million of Series 2025-1 Class A notes from Bonanza Re Ltd. come with an initial expected loss of 5.53%. They were first offered with price guidance in a range from 80% to 82% of par (being zero-coupon in nature), which was later updated to 82% to 84% of par. We’re now told the guidance has been fixed at 84% of par, which we understand is where the notes are expected to be priced. That’s a very rough spread equivalent of 16%, which has come down from a mid-point of 19% when the notes were first offered.

So it is now clear that Progressive will more than replace the soon to mature $70 million aggregate tranche of its Bonanza Re Ltd. (Series 2024-1) cat bond issuance, while also securing that coverage at an attractive price.

Recall that, Progressive added a novel parametric severe convective storm aggregate reinsurance arrangement this year at its traditional reinsurance renewal, to provide responsive aggregate protection for qualifying thunderstorm, hail and tornado loss events.

You can read all about this Bonanza Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.