The second catastrophe bond to be sponsored by relatively new insurance and reinsurance company Vantage Risk Ltd. has seen a significant increase in pricing, with the still $65 million Vista Re Ltd. (Series 2022-1) issuance seeing the mid-point of guidance rising 16% while marketing.
It’s another sign of catastrophe bond investor demand for adequate returns, which appears to have especially been the case with this relatively higher-risk aggregate retro cat bond deal.
Vantage, the start-up launched by industry veterans Greg Hendrick and Dinos Iordanou, returned to the catastrophe bond market recently looking to extend its capital markets backed catastrophe reinsurance protection.
The Vista Re 2022-1 cat bond was targeting at least $65 million of multi-year retro reinsurance protection on an industry-loss basis for Vantage, but at a lower layer in its risk tower, as the company seeks to cede a riskier layer of its reinsurance program to cat bond funds and their investors in its second Vista Re transaction.
Vista Re Ltd. targets issuance of a single tranche of Class A Series 2022-1 notes, still targeted at $65 million as there’s been no change in size, we’re told.
The notes issued by Vista Re will cover Vantage Risk against certain 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, on an industry loss trigger, state weighted and annual aggregate basis, running across three risk periods, with maturity slated for May 14th 2025.
The notes have an initial attachment point of 7.23% and expected loss of 5.97%. They were first offered to cat bond investors with coupon guide pricing in a range from 12.25% to 13%.
But investors have seemingly responded with a demand for higher returns, as the coupon guide pricing has now been elevated to a range of 14.25% to 15%, sources told us.
That price hike represents a relatively significant roughly 16%, if you take the mid-point of initial guidance and compare it to the new mid-point of this revised guidance range.
This is one of the most significant price increases we’ve seen in a catastrophe bond issuance while it’s being marketed this year.
This likely reflects the riskier nature of these notes, attaching much lower-down in Vantage’s reinsurance tower than its first cat bond last year that secured the company $225 million of industry loss based retrocessional reinsurance against losses from North American peak peril catastrophe events.
The move in pricing also reflects cat bond fund managers and investors being particularly disciplined, in demanding sufficient returns for deploying their capital into new aggregate retro reinsurance deals in 2022.
You can read all about this Vista Re Ltd. (Series 2022-1) catastrophe bond in our extensive Artemis Deal Directory.
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