Specialty insurance and reinsurance underwriter the Canopius Group has now secured its first ever 144A catastrophe bond, after the debut Finca Re Ltd. (Series 2022-1) transaction priced to provide the company with $75 million of peak US catastrophe reinsurance protection.
Canopius’ Finca Re catastrophe bond transaction has now been priced and sources told us the deal did not increase from its initial targeted size, but that the notes have priced at the top-end of initial guidance.
However, for a first-time cat bond sponsor in the current market environment this is still a strong result for Canopius, as only a handful of recent cat bonds from repeat sponsors have managed to price within their initial guidance in recent months.
Canopius entered the market with its first full 144A catastrophe bond a fortnight ago, as it looked to cat bond investors to add to its retrocessional reinsurance protection.
Finca Re Ltd. had been established in Bermuda as a catastrophe bond issuer for Canopius and is expected to be licensed as a special purpose insurer (SPI).
Originally, the Finca Re catastrophe bond was scheduled to get priced last week and to close this week, so within the second-quarter month of June.
But a slight delay to its issuance now means that pricing occurred yesterday and the settlement and closing of this Finca Re 2022-1 cat bond issuance will now occur in early July, now making this deal a third-quarter cat bond issuance.
At launch to investors, Finca Re Ltd. was seeking to issue $75 million or more in Series 202-1 Class A notes, to provide retro reinsurance protection to Canopius’ underwriting entities, Canopius Re, Canopius US Insurance, Canopius Managing Agents and its Lloyd’s syndicates 4444 and 1861.
The Finca Re 2022-1 cat bond cover will run across a nearly three-year term for Canopius, to the end of May 2025, providing it with multi-year protection against losses from US named storms and earthquakes (including Puerto Rico and the US Virgin Islands), on a weighted industry loss trigger and annual aggregate basis.
As we explained before, the Finca Re cat bond is more exposure weighted towards named storm risks, with Florida and Texas the focus states, while its earthquake exposure is majority California focused.
The now confirmed as $75 million in Series 2022-1 Class A notes that Finca Re Ltd. will issue in July have an initial attachment point of 2.47% and an initial base expected loss of 1.82%.
The Finca Re 2022-1 notes were first offered to cat bond investors with price guidance of 7.25% to 7.75%, but we’re now told the pricing has been finalised to pay investors a coupon of 7.75%, so at the top-end of guidance.
Canopius is just the latest first-time cat bond sponsor of 2022, a year that has seen numerous companies enter the market for their debut issues.
As said above, while this first Finca Re cat bond has not increased in size and priced at the top-end of guidance, it did still price within the initial marketed range and for a first-time sponsor that is still a strong result for Canopius, as it brings additional capital markets funding into its reinsurance arrangements.
Read all about this new Finca Re Ltd. (Series 2022-1) catastrophe bond transaction from Canopius Group and every other cat bond deal ever issued in the extensive Artemis Deal Directory.
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