Universal’s Cosaint Re cat bond sees pricing fall below guidance

Florida headquartered insurer Universal Insurance Holdings now looks likely to secures its first catastrophe bond, the Cosaint Re Pte. Ltd. (Series 2021-1) transaction, with pricing below the low-end of initial guidance, adding another cat bond deal to the list of those pricing down.

As we said earlier today, every property catastrophe bond issued or priced so far in 2021 has seen its pricing decline while being marketed to investors in 2021, with the majority seeing their pricing decline to the bottom end of initial spread guidance or even lower.

Universal’s is the latest to do so and the insurer looks set to secure the multi-year collateralized reinsurance from the Cosaint Re cat bond deal at a level roughly 6.4% below the mid-point of initial guidance.

Universal had already upsized on the cat bond issuance, as we reported, with the offering growing from $100 million to $150 million for the company.

The Cosaint Re Pte. catastrophe bond will provide Universal with US named storm reinsurance on an indemnity and per-occurrence basis, across a three-year term, with coverage focused on Florida.

The now $150 million tranche of Class A notes have an initial expected loss of 2.97%.

The notes were initially offered to catastrophe bond investors with coupon guidance of 9.5% to 10.25%.

That was lowered, to spread guidance of 9.25% to 9.5%, so below the bottom-end of the initial range.

Now, we’re told this has been fixed at the lowest-end, of 9.25%, so roughly a -6.4% decline in pricing from the initial mid-point the cat bond deal was marketed at.

That signals yet another catastrophe bond with strong execution and pricing below initial expectations, a pleasing result for a first time cat bond sponsor such as Universal.

We’ll update you when the Cosaint Re Pte. Ltd. (Series 2021-1) catastrophe bond has priced and you can read about this and every other cat bond transaction in the Artemis Deal Directory.