Allied World secures upsized $275m 2001 CAT Re bond with 14% price drop

Allied World Assurance Company (AWAC) has successfully priced its latest catastrophe bond, securing the upsized target for $275 million of reinsurance protection from its 2001 CAT Re Ltd. (Series 2023-1)  renewal transaction, while the spread was priced roughly 14% below the mid-point of initial guidance.

Allied World returned to the cat bond market at the start of this month, seeking $250 million in coverage from this new issuance, which will go some way to renewing its soon to mature November 2020 issuance, a $210 million 2001 CAT Re 2020-1 deal.

Allied World’s appetite increased, with this cat bond offering updated to pitch the issuance to provide $275 million of capital markets backed retrocessional reinsurance coverage for the company, while at the same time the price guidance was lowered.

Now, we’re told that the 2001 CAT Re 2023-1 cat bond issuance has been priced and Allied World has secured the $275 million raised target, while at the same time the spread has been fixed at the bottom of already reduced price guidance.

Which means that special purpose insurer 2001 CAT Re Ltd. will issue a single $275 million tranche of Class A Series 2023-1 notes.

The notes will provide Allied World and subsidiaries with fully-collateralized reinsurance protection against certain losses from U.S named storms, U.S. and Canada earthquakes, and European windstorm risks, on an industry-loss trigger and per-occurrence basis across three annual risk periods from January 1st 2024.

The now confirmed as $275 million of Series 2023-1 Class A notes to be issued by 2001 CAT Re Ltd. have an initial expected loss of 5.13%.

The notes were at first offered to cat bond investors with spread price guidance in a range from 14% to 15%, but we subsequently learned that had been lowered and a wider range given, with the updated guidance having been for a spread of 12.5% to 14%.

Now, we’ve been told that the spread has been fixed and the notes priced at 12.5%, which represents a roughly 14% decline in pricing from the initial guidance mid-point, a strong result for Allied World.

Allied World had clearly worked with its partners to maximise the effectiveness of this cat bond issuance, securing much better than anticipated execution in the end, with price seemingly perhaps more important than the size of the cat bond, given the relatively small upsizing.

Read all about this new 2001 CAT Re Ltd. (Series 2023-1) catastrophe bond and more than 950 other cat bond transactions in the Artemis Deal Directory.