American Integrity lifts new cat bond size target to $295m or more

American Integrity Insurance Company is aiming to upsize its new catastrophe bond coverage, with now $295 million or more in collateralized named storm reinsurance protection being sought from the Integrity Re Ltd. (Series 2024-1) issuance.

American Integrity returned to the catastrophe bond market earlier this month, initially seeking at least $150 million in collateralized named storm reinsurance protection for its exposures across three southeast US states.

It’s the first time the expansive insurer has targeted cat bond backed reinsurance coverage for more than just Florida, with this new Integrity Re 2024-1 cat bond seeking protection for American Integrity against named storm losses in Florida, Georgia and South Carolina.

Although, as we said, more than 98%, of the insured values to be covered by this catastrophe bond are located in Florida, so this is largely a Florida named storm bond.

Details of every cat bond from American Integrity can be found in our Deal Directory.

Sources have now told us that American Integrity has updated the size target and pricing for its latest Integrity Re 2024-1 catastrophe bond, with much more in protection now being sought at $295 million or greater and price indications generally falling towards the lowest ends of initial guidance.

When the deal launched to investors, American Integrity was seeking $150 million or more in indemnity based named storm reinsurance across the covered states, across two risk periods, coming on risk from June 2024, with the coverage running to the end of May 2026.

Four tranches of notes are to be issued, one of which will provide annual aggregate reinsurance and three to provide per-occurrence reinsurance that would cascade down after events erode lower layers of the insurers’ reinsurance tower, such as its FHCF coverage.

The aggregate layer of this cat bond deal were originally a $50 million tranche of Class A notes, but we’re now told this is being upsized to its maximum to $120 million, to cover the full layer.

The now $120 million of Class A notes have an initial expected loss of 0.22% and were first marketed with spread guidance in a range from 12% to 13%, but we’re now told this guidance has been reduced to between 11% and 12%.

The Class B tranche of notes are now being positioned as $50 million or more in size and will provide per-occurrence protection, with an initial expected loss of 2.35%. These notes were first offered with spread guidance in a range from 14% to 15%, but we’re told this has now dropped to an updated range of 13.5% to 14%.

The Class C tranche of notes were not sized initially, but we’re now told are targeted to be $50 million or more as well. These also provide per-occurrence protection, with an initial expected loss of 2.38% and having been initially marketed without spread guidance, we’re now told they are offered with pricing of 17%.

The final tranche of Class D notes were originally positioned to be $50 million in size, but are now targeted to secure $75 million or more in per-occurrence reinsurance protection. They have an initial expected loss of 3.56% and were first offered with spread guidance in a range from 22% to 23%, but we now understand this to have been lowered to a new range of 22.5% to 23%.

Remember, the Class B, C and D tranches of notes all have drop-down or cascading features, so can cascade down the sponsors reinsurance tower as events occur and reinsurance layers below are eroded, hence the relatively high multiples-at-market we suspect.

As American Integrity progresses through this catastrophe bond issuance, it is now set to be the insurer’s largest ever at $295 million or more.

It’s good to see American Integrity looking to expand its catastrophe bond backed reinsurance protection, to support the expansion of its underwriting business into regions outside of Florida.

You can read all about this new Integrity Re Ltd. (Series 2024-1) catastrophe bond and every cat bond deal in the Artemis Deal Directory.