Vantage Risk’s target for its first catastrophe bond has been lifted by 50%, as the recently launched Vista Re Ltd. (Series 2021-1) cat bond issuance looks set to hit $225 million in size, while at the same time pricing looks likely to come in at the bottom of, or below, guidance.
Vantage Risk, the insurance and reinsurance start-up launched by industry veterans Greg Hendrick and Dinos Iordanou, entered the catastrophe bond market for its first time almost two weeks ago, as Artemis was first to report.
At the time, Vantage was seeking at least $150 million of North American multi-peril collateralized retrocessional reinsurance from its first trip to the cat bond market.
But with issuance conditions still attractive for sponsors, Vantage’s first cat bond looks set to follow the majority of deals issued in 2021 so far, by increasing in size, while pricing of the bonds coupon drops.
So now, Vista Re Ltd. aims to issue a single $225 million tranche of Class A Series 2021-1 notes, which will be sold to ILS and cat bond investors and the proceeds used to fully-collateralize a retro reinsurance agreement between Vista Re and Vantage Risk Ltd.
The now $225 million of reinsurance protection will cover Vantage Risk against losses from North American named storms and earthquakes, including the United States, Puerto Rico, U.S. Virgin Islands, D.C. and also Canada for earthquake risks.
Coverage will be on an industry loss trigger basis, which is state weighted and calculated over annual risk periods to provide aggregate protection, with PCS as the reporting agency in the case of all perils, across a three-year term.
A $15 million franchise deductible will apply for every qualifying catastrophe event, while the notes will initially attach at $200 million of losses.
The now $225 million of Series 2021-1 Class A notes to be issued by Vista Re Ltd., which have an initial expected loss of 3.32%, were first offered to cat bond funds and investors with price guidance in a range from 7.25% to 7.75%.
Now, we’re told that the price guidance range has been lowered to 6.75% to 7.25%, suggesting the coupon will settle at the bottom-end of initial guidance, or even lower.
So Vantage’s first cat bond looks set to follow in the footsteps of the majority of 144A property catastrophe bonds issued so far in 2021, by increasing the amount of coverage secured, while pricing of the protection falls.