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Security First settles for $175m First Coast Re cat bond at low pricing


Florida’s Security First Insurance Company has settled for $175 million of collateralized reinsurance coverage from its First Coast Re Ltd. (Series 2017-1) catastrophe bond transaction, with final pricing terms achieved at the bottom of a reduced range.

The First Coast Re 2017-1 transaction will provide Security First with reinsurance protection against losses from named storms and severe thunderstorms in the state of Florida, over a four-year term, on an indemnity trigger and per-occurrence basis.

At its launch, the insurer was targeting a $150 million cat bond issuance with pricing guidance given in a range from 4.5% to 5%.

Then last week, the target size for the transaction was lifted to up to $200 million, while the price guidance was reduced to below the initial range and tightened to 4.25% to 4.5%.

Now, sources tell us today, that at final pricing the deal is set to complete at $175 million in size, while the coupon pricing has been fixed at the lowest end of the reduced range at 4.25%.

It’s another example of cat bond pricing settling at very low levels, with the 1.75% expected loss meaning the deal will pay investors a multiple of 2.4x. This is however aligned with other recent transactions at this level of risk.

Security First Insurance will be pleased with this issuance, as the insurers First Coast Re 2016-1 cat bond priced at 4% for an expected loss of 1.15%, so this year the insurer has covered a riskier layer of its program for just an additional 0.25% coupon payment.

The First Coast Re Ltd. (Series 2017-1) cat bond is scheduled to complete in a fortnight. You can read about this and every other catastrophe bond transaction in the Artemis Deal Directory.

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