Price guidance for the $95m Riverfront Re Ltd. (Series 2014-1) catastrophe bond, being issued on behalf of first time cat bond sponsor Great American Insurance Group, has dropped to below the original range, Artemis understands.
Following in the footsteps of almost every new catastrophe bond brought to market in the last few months, Riverfront Re Ltd. looks set to price below the original coupon guidance range.
For sponsoring U.S. property casualty insurer Great American Insurance Group this will help to drive home the attractiveness of the pricing available in the ILS market for reinsurance coverage right now, providing another example to potential sponsors showing that issuing a cat bond right now could be a particularly good strategy.
Riverfront Re Ltd., through the issuance and sale of a single $95m Series 2014-1 tranche of notes, will provide Great American Insurance and subsidiaries with a multi-year source of fully-collateralized reinsurance protection against losses from named storms, earthquakes (including fire following), severe thunderstorms, and winter storms on a per-occurrence and indemnity basis.
When the Riverfront Re cat bond launched the $95m of cat bond notes were being marketed to investors with a coupon guide range of 4.25% to 5%. Artemis understands that guidance has now been lowered and tightened and the notes are now being offered with a price range of 4% to 4.25%.
For Great American Insurance, should the notes price at the bottom of the new range at 4%, it would represent a saving of around 13.5% from the mid-point of initial guidance, making the transaction particularly effective on a cost basis.
Artemis understands that the Riverfront Re catastrophe bond will price later this week and price before the end of March.