The targeted size for the latest catastrophe bond to be sponsored by Transatlantic Holdings, the parent to Transatlantic Reinsurance (or TransRe), has been increased we understand, with the Bowline Re Ltd. (Series 2019-1) transaction potentially set to hit $275 million.
TransRe’s latest catastrophe bond transaction was launched to the market in February, but at the time was only targeting a $200 million source of collateralized reinsurance for the carrier.
Now, we’re told that the target size for the deal has been lifted, with the execution expected to be at somewhere between $225 million and $275 million, depending on demand from investors.
At the same time, we also understand that the pricing is likely to be in the upper-half of the marketed ranges, as catastrophe bond investors continue to push for better rates following recent losses.
The Bowline Re Ltd. (Series 2019-1) catastrophe bond sees Trans Re seeking to expand its retrocessional reinsurance protection for its portfolio of property catastrophe risks across a range of subsidiaries using the capital markets as a source.
The deal will provide TransRe and its subsidiaries with a four-year source of annual aggregate retrocessional reinsurance protection on an industry loss trigger basis, across four individual risk periods and covering on an industry loss trigger and annual aggregate basis against losses from named storms, earthquakes and severe thunderstorms affecting the United States, Canada, Puerto Rico, the U.S. Virgin Islands and District of Colombia.
The deal launched with Bowline Re Ltd. said likely to issue two tranches of notes, sized at $100 million each. Now, it looks like there is a good chance that both tranches will increase in size, to support TransRe’s retro needs.
The Class A tranche, which is the lower risk layer of notes having an expected loss of 1.36%, is now targeting a size of up to $125 million. At launch this tranche was offered to investors with price guidance in a range from 4.5% to 5%, but we’re told this range has tightened towards the upper-end at 4.75% to 5%.
The Class B higher risk tranche, which has an expected loss of 3.69%, is now targeting a size of $125 million to $150 million, we understand. These notes were offered to investors with price guidance in a range from 8% to 8.75%, but that range has now been fixed at 8.5%, so above the mid-point of guidance.
So this could be TransRe’s largest cat bond to-date, if it reaches the maximum target size at $275 million, larger than its 2018 deal’s $250 million.