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Universal targets first cat bond with $100m Cosaint Re from Singapore


Universal Insurance Holdings, the Florida headquartered, nationally expansive U.S. primary insurance carrier, has entered the catastrophe bond market for the first time with a $100 million Cosaint Re Pte. Ltd. (Series 2021-1) transaction that is being issued out of Singapore.

universal-insurance-logoUniversal has always been a significant user of the capital markets and insurance-linked securities (ILS) funds within its reinsurance tower, but this Cosaint Re catastrophe bond is the first time we’ve listed a subsidiary of the insurer within our cat bond Deal Directory.

Cosaint means protection in Gaelic (Irish) and its an appropriate name for the first catastrophe bond foray from Universal.

Sources explained to us that Universal is sponsoring its first catastrophe bond to secure multi-year, collateralized reinsurance protection against losses from U.S. named storms, so hurricanes and tropical storms, for its Universal Property and Casualty Insurance Company (UPCIC) and any direct subsidiaries.

Hence, Universal Property and Casualty Insurance Company (UPCIC) is the cedent for the coverage and we understand any existing or future subsidiaries can also benefit from the reinsurance coverage provided by the Cosaint Re Pte. catastrophe bond deal.

Universal has chosen to issue its first cat bond out of Singapore, with special purpose reinsurance vehicle Cosaint Re Pte. Ltd. established there.

Cosaint Re Pte. Ltd. will seek to issue a single tranche of Class A notes, the proceeds of which sale will be used to collateralize an underlying reinsurance agreement between Cosaint Re and UPCIC.

The reinsurance protection will cover UPCIC against losses from named storms, so tropical storms and hurricanes, across all U.S. states where the company has exposure, which includes east and northeast coast states, Gulf Coast states where UPCIC operates and also Hawaii.

However, we’re told that the vast majority of the exposure held within this Cosaint Re catastrophe bond will be in the state of Florida, Universal’s home.

The protection offered by the catastrophe bond will be on an indemnity reinsurance and per-occurrence basis, across a three-year term.

Cosaint Re Pte. is seeking to issue at least a $100 million Class A tranche of Class A notes, with the coverage attaching at just over $1.1 billion of UPCIC named storm losses in the first risk period, we’re told.

We understand that this equates to an initial expected loss of 2.97% for the notes and that they are being offered to catastrophe bond investors with coupon in a guidance range from 9.5% to 10.25%.

It’s encouraging to see another new sponsor coming to the catastrophe bond market in search of reinsurance in 2021.

Universal buys a significant reinsurance program, with named storm coverage a key focus. So should pricing prove attractive in the catastrophe bond market it would be easy to see the company making cat bonds a regular component of the tower, given the multi-year benefits the Cosaint Re issue could bring.

We’ll keep you updated as the Cosaint Re Pte. Ltd. (Series 2021-1) catastrophe bond comes to market and you can read about this and every other cat bond transaction in the Artemis Deal Directory.

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