Universal’s Cosaint Re cat bond target lifted to $150m, while pricing drops

The first catastrophe bond to be sponsored by Florida headquartered insurer Universal Insurance Holdings looks likely to upsize with the target now lifted by 50% to $150 million, while at the same time the price guidance for the Cosaint Re Pte. Ltd. (Series 2021-1) transaction has been lowered.

Universal entered the catastrophe bond market for the first time with this Cosaint Re catastrophe bond at the beginning of the month, the first time we’ve listed a subsidiary of the insurer within our cat bond Deal Directory.

Issued out of Singapore, as the company takes advantage of its ILS grant scheme, Universal is looking 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 with the Cosaint Re cat bond deal.

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

This reinsurance from Cosaint Re will cover UPCIC against certain 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.

But the majority of the exposure held within this Cosaint Re catastrophe bond will be in the state of Florida, Universal’s home, where expected losses are concentrated within the modelling.

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

The deal was launched with Cosaint Re Pte. 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.

Now, sources told us that the target size has been lifted by 50%, with a $150 million issuance now anticipated.

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

The notes were at first offered to catastrophe bond investors with coupon in a guidance range from 9.5% to 10.25%, but we’re also now told that this has dropped, with spread guidance now in a range from 9.25% to 9.5%, so below the bottom-end of the initial range.

That signals yet another catastrophe bond with strong execution, which for a first time cat bond sponsor, such as Universal, will be pleasing.

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.