Security First prices $250m First Coast Re IV 2025 cat bond at low-end of reduced guidance

Security First Insurance Company, a specialist Florida domestic homeowners insurer, has now secured the upsized $250 million target for reinsurance from its new First Coast Re IV Ltd. (Series 2025-1) catastrophe bond issuance, while both tranches of notes priced at the low-end of reduced guidance, Artemis can report.

First Coast Re IV Ltd. (Series 2025-1) is the sixth cat bond in the First Coast Re series sponsored by Security First, and has now become the largest at $250 million in size, having increased during marketing while also pricing down.

In late January, we said the company was seeking $210 million of named storm reinsurance protection through its latest cat bond issuance, comprised of a $60 million Class A tranche of Series 2025-1 notes and a $150 million Class B tranche of notes.

We then reported that Security First had lifted the target size for the issuance to up to $250 million, with the size of the Class B notes unchanged, but the Class A tranche of notes upsized to target a range of between $60 million and $100 million.

In our next update on this deal we reported that the Class A tranche of notes would target the upper $100 million target size, while the Class B notes still targeted $150 million, as the new First Coast Re IV Ltd. (Series 2025-1) cat bond looked set to provide the insurer with $250 million in reinsurance coverage.

At the same time the price guidance was lowered with each update and we now hear from sources that both tranches have been priced at the bottom end of their reduced guidance ranges.

The $100 million Class A tranche of notes come with an initial attachment probability of 1.41% and an initial base expected loss of 1.30%. Initially, these notes had a spread price guidance range of 7.75% to 8.5%, which later fell to between 7% and 7.75%, before falling further to between 6.5% and 7%. At final pricing the spread was fixed at 6.5%, so the bottom-end.

From the initial mid-point of guidance the final spread for the Class A notes indicates a price decline of 20% over the marketing period for this cat bond.

Similarly, the Class B tranche of notes, which are the riskier of the two with an initial attachment probability of 2.82%, and an initial base expected loss of 2.25%, began with an initial spread guidance range of between 8.75% and 9.5%, later lowered to between 8% and 8.75%, and then lowered again to between 7.5% and 8%. We’re now told that at final pricing the spread was fixed at the low-end of 7.5%.

From the mid-point of initial guidance for the Class B notes, this indicates a price decline of almost 18% over the marketing of this cat bond deal.

So Security First Insurance has secured its largest catastrophe bond yet, to provide it $250 million of collateralized named storm reinsurance on a per-occurrence, indemnity trigger and cascading basis over a three hurricane season period.

Read about every cat bond sponsored by Security First in our Deal Directory.

You can read all about this new First Coast Re IV Ltd. (Series 2025-1) catastrophe bond, as well as details on over 1,000 other cat bond transactions in the extensive Artemis Deal Directory.