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Security First gets new First Coast Re IV cat bond with ~14% drop in price


Florida domestic homeowners insurer Security First Insurance Company has now successfully secured $100 million of reinsurance through its new First Coast Re IV Ltd. (Series 2023-1) catastrophe bond issuance, while the pricing has been finalised around 14% lower than the mid-point of initial guidance.

security-first-insurance-logo2Security First Insurance came back to the catastrophe bond market for its fifth issuance at the beginning of March.

You can read about each of the Security First cat bonds in our Deal Directory.

The insurer was targeting $100 million of collateralized reinsurance protection, against losses from Florida named storm and severe thunderstorm risks, on an indemnity trigger, per-occurrence and cascading basis.

Now priced, we’re told the issuance of Series 2023-1 Class A tranche of notes by Bermuda-based notes issued by First Coast Re IV Ltd. will remain sized to provide that targeted $100 million of protection for Security First.

As we explained before, it seems the carrier has been more focused on price execution at this time, which it now transpires has worked positively for the insurer, with the notes pricing well below initial guidance, we’re told.

The $100 million of Series 2023-1 Class A notes that First Coast Re IV will issue have an initial base expected loss of 1.25% and were initially marketed to cat bond funds and investors with spread guidance in a range from 10% to 11%.

As we later reported, that price guidance was lowered, with the notes offered to pay a spread of between 9.5% and 10% and then we reported that the pricing declined further still, to a range of 9% to 9.5%.

We’re now told that the $100 million First Coast Re IV Series 2023-1 Class A notes have been priced to pay investors a spread of 9%, so the lowest-end of the twice reduced guidance and a roughly 14% drop in price from the initial mid-point.

The First Coast Re IV catastrophe bond followed the trend of every recent cat bond, to price down, with the vast majority of issues through a busy March seeing their spread decline while being marketed to cat bond funds and investors.

Investor appetites are high and capital levels at cat bond fund managers seemingly rising, meaning that the cat bond market has been able to offer increasingly strong price execution, resulting in favourable placements for many sponsors, albeit still at rates much higher than they would have been a year ago due to reinsurance hardening.

You can read all about this new First Coast Re IV Ltd. (Series 2023-1) catastrophe bond, as well as details on over 900 other cat bond transactions in the extensive Artemis Deal Directory.

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