Tower Hill aims to double its debut Winston Re cat bond to $400m

Florida homeowners and commercial property insurance underwriter, the Tower Hill Insurance Exchange, is aiming to double the size of its debut catastrophe bond, with its target for Florida named storm reinsurance from the Winston Re Ltd. (Series 2024-1) issuance now lifted to $400 million.

Tower Hill Insurance Exchange entered the catastrophe bond market for the first time in January, with the company seeking $200 million or more in Florida named storm reinsurance from its debut cat bond sponsorship.

The company had renewed its catastrophe reinsurance tower at close to $2 billion in size at the mid-year of 2023, but clearly wants to augment this, with the capital markets seen as a diversifying source of risk capital to complement its 2024 reinsurance renewal.

Now, we’re told the target size for this debut Winston Re catastrophe bond for Tower Hill has risen significantly, with between $325 million and $400 million in reinsurance now being sought by the sponsor.

At the same time, the price guidance has been fixed, although not yet finalised, with the less risky layer looking set to have its spread finalised in the upper-half of guidance, the lower layer of notes at the bottom of guidance.

Using a newly established Bermuda based company named Winston Re Ltd. Tower Hill’s debut catastrophe bond will see that structure issuing two tranches of notes, targeting now between $325 million and $400 million of reinsurance protection against named storm losses in Florida for the insurer.

The reinsurance protection from the Winston Re 2024-1 cat bond will be on an indemnity and per-occurrence basis, over a three hurricane season term, starting from June 2024 and with maturity due in February 2027.

What was a $100 million Class A tranche of notes are now pitched at between $225 million and $250 million in size, we’re told.

The Class A notes will have an initial expected loss of 1.56% and were initially offered to investors with spread guidance in a range from 10% to 11%, but we’re told that guidance is now fixed at 10.75%, so in the upper-half of the initial range.

What was a $100 million Class B tranche of notes are now offered as from there up to $150 million in size, sources said.

These are riskier, set to sit beneath the Class A’s, having an initial expected loss of 1.97% and these notes were first offered to investors with spread guidance in a range from 11.75% to 12.75%, but that has now been fixed at the lower-end of 11.75%.

Should Tower Hill be successful in its efforts to double its debut catastrophe bond in size to $400 million, or even just significantly upsize it, it will send a strong signal to Florida reinsurance cedents that the capital markets is open and willing to take on their named storm risk, at the right price.

You can read all about this Winston Re Ltd. (Series 2024-1) in the extensive Artemis Deal Directory that includes details on almost every cat bond ever issued.