Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Queen City Re cat bond prices at low end of reduced range


Final pricing has been set for American Modern Insurance Group’s first catastrophe bond, Queen City Re Ltd. (Series 2013-1), according to our sources. Pricing declined by 20% during marketing from the mid-point of the initial guidance range.

Investors have once again demonstrated strong demand for new catastrophe bond paper, helping Munich Re’s U.S. insurance subsidiary American Modern Insurance Group achieve a good reduction in pricing from the transactions initial coupon guidance.

The $75m Queen City Re cat bond began marketing with price guidance of 4% to 4.75% just over a week ago. By yesterday, as investors showed their appetite for this cat bond, the guidance was reduced to below the initial range at 3.5% to 4%.

We understand that at final pricing today the Queen City Re cat bond has been set to pay a coupon of 3.5%, right at the bottom of the already reduced range. That’s a 20% reduction from the mid-point of the price guidance range the deal launched with and 26% below to the top of that range.

This continues the 2013 trend which has seen practically every catastrophe bond tranche issued in 2013 drop in price while marketing.

The Queen City Re deal will complete on Monday we understand.

Read all about Queen City Re Ltd. (Series 2013-1) in our catastrophe bond Deal Directory. We’ll update you as the transaction comes to market.

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