American Coastal returns for $100m Florida wind cat bond, Armor Re II 2024-2

American Coastal Insurance Company is back in the catastrophe bond market and seeking $100 million or more in Florida named storm reinsurance protection from the issuance of a new Armor Re II Ltd. (Series 2024-2) transaction, Artemis has learned.

This will be the second Armor Re II catastrophe bond from the insurer of 2024, having sponsored a $200 million Armor Re II Ltd. (Series 2024-1) cat bond issuance back in April.

American Coastal Insurance Company (AmCoastal Insurance) is no stranger to the cat bond market, with this new issuance set to be the seventh to take the Armor Re name, although a number where sponsored by United and Interboro entities, as well as AmCoastal Insurance.

See details of every catastrophe bond transaction in the Artemis Deal Directory.

For this issuance, AmCoastal is again using its Bermuda-based special purpose insurer Armor Re II Ltd. and the vehicle will seek to issue a single tranche of Series 2024-2 Class A notes, that will be sold to investors and the proceeds used to collateralize a reinsurance agreement between the SPI and American Coastal Insurance Company.

These Armor Re II 2024-2 Class A notes will provide American Coastal with a just over three-year source of Florida named storm reinsurance protection, running to the end of December 2027, we are told

The notes have been structured to protect AmCoastal with Florida named storm and hurricane reinsurance on an indemnity trigger and per-occurrence basis over that risk period.

Armor Re II is looking to issue $100 million or more in Class A notes, with their coverage set to attach at $50 million of losses to AmCoastal Insurance and exhaust their reinsurance coverage at $250 million, which means there is ample room for this new cat bond to upsize for the insurer, should the cat bond investor community be receptive to it.

The $100 million of Series 2024-2 Class A notes that Armor Re II Ltd. will issue come with an initial attachment probability of 0.75%, an initial expected loss of 0.59% and are being offered to cat bond investors with spread price guidance in a range from 9% to 10%, sources said.

While the attachment point looks low at $50 million, the Series 2024-2 notes sit above stated reinsurance and the FHCF participation, which means that the effective attachment point looks more like a ground-up loss of almost $1.13 billion to AmCoastal.

As a result, these are relatively remote in terms of risk and where they sit in the AmCoastal Insurance reinsurance tower, we are told.

It’s an unusual time of year to bring a Florida hurricane cat bond to market, but given the strong investor appetite that has been tightening spreads across recent new issues this could play in AmCoastal’s favour.

So it will be interesting to see what the reception is like to this unseasonal Florida wind cat bond issuance, as if execution is strong it could send a signal to other companies seeking Florida focused reinsurance that the catastrophe bond market is open and able to absorb that risk at attractive pricing at this time.

We also recently reported that American Coastal’s reported loss estimate for recent hurricane Milton was not sufficient to trouble its in-force cat bond.

You can read all about this new Armor Re II Ltd. (Series 2024-2) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.