Louisiana Citizens gets its largest cat bond, as $275m Bayou Re deal priced

Louisiana Citizens Property Insurance Corporation has now secured the upsized $275 million of collateralized named storm reinsurance from its new Bayou Re Ltd. (Series 2024-1) catastrophe bond as pricing was finalised at the low-end of reduced guidance, with the deal becoming its largest cat bond to-date.

Louisiana Citizens, the non-profit insurer of last resort for residential and commercial property policies in the state, launched its latest cat bond, Bayou Re 2024-1, to investors back at the beginning of April, with an initial goal to secure $225 million of Louisiana named storm reinsurance protection.

As we later reported, the target size for the issuance was increased, with up to $275 million of reinsurance then being sought.

Now, Artemis has learned that Louisiana Citizens secured that upsized amount of reinsurance, with the Bayou Re 2024-1 cat bond notes pricing to provide it $275 million of named storm reinsurance for its home state.

This is set to be the tenth catastrophe bond sponsored by Louisiana Citizens we now have listed in our Deal Directory.

It is the second catastrophe bond under the Bayou Re Ltd. special purpose insurer (SPI) based in Bermuda.

As well as increasing the size of the cat bond, to become the largest it has ever sponsored, Louisiana Citizens also secured this new fully-collateralized and multi-year reinsurance at reduced pricing, compared to the initial guidance.

The Bayou Re 2024-1 cat bond notes will once settled protect Louisiana Citizens with $275 million of reinsurance against named storm losses on an indemnity trigger and per-occurrence basis, across a three-year term.

The initially $150 million Class A tranche of notes were upsized successfully to provide $200 million of reinsurance, we are now told.

The Class A notes will come with an initial expected loss of 1.14% and were initially offered to investors with spread price guidance of 9.5% to 10.5%, which was then lowered to a new range of 8.5% to 9.5% and have now priced at the bottom-end, for a spread of 8.5% to be paid to investors, we understand.

The Class B tranche of notes remained at $75 million in size and are riskier, having an initial expected loss of 3.19%. They launched to investors with spread price guidance in a range from 19% to 20%, which was later reduced to a new range of 18.5% to 19% and we’re now told have been priced again at the lowest-end, for a spread of 18.5% to be paid.

Louisiana Citizens has not only secured its largest ever slice of catastrophe bond backed reinsurance, it has done so at lower than anticipated pricing.

The residual market insurer has benefited from strong execution for its latest catastrophe bond deal, which have enabled it to make the most of capital market conditions to increase the share of its reinsurance tower that is attributed to the cat bond market this year.

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