Security First targets second price reduction for $250m First Coast Re IV 2025 cat bond

Security First Insurance Company, a specialist Florida domestic homeowners insurer, has seen the price guidance for its First Coast Re IV Ltd. (Series 2025-1) catastrophe bond issuance decline further, while the Class A tranche of notes are now targeting $100 million in size, Artemis has learned.

First Coast Re IV Ltd. (Series 2025-1) is the sixth First Coast Re cat bond sponsored by Security First, and looks set to be the largest with a target size of $250 million.

In late January, we reported that the Floridian carrier was targeting $210 million in named storm reinsurance 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.

Last week, Artemis learned that Security First had lifted the target size of 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.

We’ve now learned that the Class A tranche of notes will target the upper $100 million size of the range, and with the Class B notes still targeting $150 million, First Coast Re IV Ltd. (Series 2025-1) looks set to provide the insurer with $250 million in reinsurance coverage.

The two tranches of notes will be sold to investors and the proceeds used to collateralize protection for the sponsor.

The now $100 million Class A tranche of notes have 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%.

Sources have told Artemis that the price guidance range for these notes has fallen further to between 6.5% and 7%, meaning that the Class A tranche of notes are set to price below the initial spread guidance range.

At the mid-point of the latest revised guidance, this would be a roughly 17% decline in spread, and at the bottom-end of the range, this would be a price decline of 20%.

It’s a similar story for the Class B tranche of notes, which had an initial spread guidance range of between 8.75% and 9.5%, later lowered to between 8% and 8.75%, with sources confirming that the spread guidance range has now been lowered again to between 7.5% and 8% for these tranches of notes. The Class B notes are the riskier of the two with an initial attachment probability of 2.82%, and an initial base expected loss of 2.25%.

For these notes, at the mid-point of that revised guidance, this would be a roughly 15% drop in spread, and at the bottom-end of the range, a price decline of almost 18%.

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.