Inigo returns with $100m target for third Montoya Re aggregate cat bond
London headquartered specialty insurance and reinsurance underwriter Inigo has returned to the catastrophe bond market for its third time, seeking $100 million or more in aggregate retro reinsurance protection from a Montoya Re Ltd. (Series 2024-1) deal.
Inigo had sponsored its first two catastrophe bonds in 2022, securing $225 million in annual aggregate retrocession across the pair of Montoya Re deals.
Now, the company is back to add more aggregate retro reinsurance protection, seeking at least $100 million of industry-loss trigger structured cover with this Montoya Re 2024-1 catastrophe bond deal.
The coverage from this 2024-1 cat bond will be very similar to the second Montoya Re 2022-2 deal, in providing Inigo with a capital markets backed source of collateralized retro against large industry losses caused by US named storms, and North American earthquakes, including Canada.
Once again, Inigo’s Syndicate 1301 at Lloyd’s will be the ultimate beneficiary of the coverage from its third cat bond.
Hannover Re will participate as the ceding reinsurer, sitting in the middle as a fronting reinsurance entity for this new issuance and then providing the reinsurance to Inigo.
Montoya Re Ltd. is seeking to issue a single tranche of Series 2024-1 Class A notes, with a target size for the issuance of $100 million or greater.
The Montoya Re 2024-1 notes will be sold to cat bond investors and the proceeds used to collateralize a retro reinsurance agreement between the SPI and Hannover Re, who will subsequently provide the reinsurance to Inigo’s Syndicate 1301.
The coverage from this latest Inigo sponsored cat bond will run for more than three years to the end of March 2027, we understand, with four risk periods, the first of which is relatively short at just about three months, after which three annual risk periods will run.
The retro reinsurance coverage provided by the Montoya Re 2024-1 cat bond will cover the peak perils of U.S. named storm, U.S. and Canada earthquake and the cat bond transaction features a PCS industry loss index trigger, with the protection provided on an annual aggregate basis.
We’re told that there will be a $15 billion franchise deductible for US named storm industry loss events and $9 billion for North American earthquakes.
The $100 million of Class A notes are being marketed with an initial attachment probability of 5.08%, an initial expected loss of 4.46% and are being offered to investors with coupon price guidance in a range from 12.25% to 13%, we are told.
These notes are riskier than the previous Montoya Re 2022-2 notes, which had an initial expected loss of 4.46% and were priced to pay a spread of 14%.
That 2022-2 Montoya Re cat bond came to market at the peak of higher cat bond spreads, in late 2022, so it will be interesting to see where pricing for this new cat bond settles for Inigo.
You can read all about this new Montoya Re Ltd. (Series 2024-1) catastrophe bond, the second from Inigo Insurance, as wel as details on every other cat bond issued in our extensive Artemis Deal Directory.
