USAA lowers pricing again for still $350m Residential Re 2026-2 cat bond

US military mutual insurer USAA’s new Residential Reinsurance 2026 Limited (Series 2026-2) catastrophe bond issuance remains at the upsized $350 million target size, but the company seeks to capitalise on investor appetite and has lowered and adjusted the price guidance for the notes on offer again, Artemis has learned.

USAA made its return to the catastrophe bond market earlier this month, initially targeting a $225 million source of multi-year per-occurrence reinsurance coverage from capital market investors with the latest in its Residential Re series of cat bond deals.

As we reported in our first update on this cat bond yesterday, USAA lifted the target size for this cat bond by 56% to seek $350 million of limit, while the price guidance was also lowered.

Sources have now told us that the $350 million target size remains, but USAA is still looking secure that protection at a more cost-effective rate, as the price guidance has been lowered and adjusted once again for each of the tranches on offer.

We won’t repeat all the details of the cat bond in our updates on size and pricing, so be sure to visit the Deal Directory entry for more background on the transaction.

So, the Residential Reinsurance 2026 Limited special purpose vehicle continues to offer three tranches of Series 2026-2 occurrence catastrophe bond notes to investors, with the proceeds set to be used to collateralize underlying reinsurance agreements between the issuing vehicle and sponsor USAA.

The notes will provide USAA with four years of indemnity per-occurrence based reinsurance protection, running from December 1st 2026 through November 30th 2030, to cover losses from the types of perils that tend to feature across all of the insurers catastrophe bond deals in recent years, that being U.S. tropical cyclones, earthquakes (plus fire following), severe thunderstorm, winter storm, wildfire, volcanic eruption, meteorite impact, other perils (all including auto & renter policy flood losses).

Residential Reinsurance 2026 Limited continues to offer a $100 million tranche of Series 2026-2 Class 2 tranche of notes. These notes come with an initial base expected loss of 6.04% and were first being offered to cat bond investors with price guidance of 8.5% to 9.25%, which was lowered at the first update to 7.75% and 8.5%, but this has now fallen again to a range of 7.25% to 7.75%.

A further tranche of Series 2026-2 Class 3 tranche of notes remain at their targeted size of $100 million. These notes have an initial base expected loss of 3.34% and were first offered to cat bond investors with price guidance of 5% to 5.5%, which was also lowered during yesterday’s update to 4.25% and 5%, but have now fallen again to a tighter spread of 3.75% to 4.25%.

The final Class 5 tranche of Series 2026-2 remain at $150 million in size. These notes have an initial base expected loss of 1.43% and were initially offered to cat bond investors with price guidance of 2.5% to 3%, which again, was lowered in our first update to 2% and 2.5%, but have reduced further to 1.75% to 2%.

With USAA once again lowering and adjusting the price of the notes on offer, it clearly shows that the insurer is looking to capitalise on catastrophe bond investor appetite to potentially gain more reinsurance support from the capital markets at more attractive pricing, from its latest cat bond sponsorship.

With now 48 catastrophe bond transactions from USAA now detailed in our Deal Directory, the insurer and its now 47 deal strong Residential Re cat bond program is the most prolific sponsor and program in the market, a regular and consistent feature since the catastrophe bond instrument was first seen in late 1996 when USAA’s first began marketing.

As a reminder, you can read all about this new Residential Reinsurance 2026 Limited (Series 2026-2) catastrophe bond from USAA and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory.