American European seeks $100m Charles River Re cat bond to cover ShoreOne book
This is the debut catastrophe bond for American European Insurance Company, with the company seeking $100 million in named storm reinsurance protection through this Charles River Re Ltd. (Series 2024-1) issuance for a coastal property book that is originated via MGA ShoreOne.
American European Insurance Company works with managing general agent (MGA) ShoreOne Insurance Managers, a coastal property specialist that offers all-perils coverage including flood.
We understand that the subject business to this first Charles River Re catastrophe bond for American European Insurance, is all sourced through this relationship with ShoreOne.
Charles River Re Ltd. has been established in Bermuda to issue a single tranche of Series 2024-1 cat bond notes, that are designed to provide American European with a multi-year source of named storm reinsurance, across a three-year term up until April 30th 2027.
The issuance is targeted at $100 million in size and the Class A notes on offer will provide named storm reinsurance on a per-occurrence and indemnity trigger basis, covering loss events in the states of Massachusetts, New Jersey, New York and South Carolina, we understand.
The coverage will run across three annual risk periods that begin on May 1st, we are told and additional covered areas can be added at annual resets, with Rhode Island said to be one of them.
The $100 million of Class A notes can attach at $175 million of losses to American European Insurance and exhaust at $300 million of losses, giving them an initial attachment probability of 2.71% and an initial expected loss of 1.87%.
The notes are offered with spread pricing in a range from 7% to 7.5%, we understand.
Despite the fact ShoreOne specialises in offering property insurance policies that always include flood cover, we’re told that in terms of expected loss contribution, it is wind that makes up the majority, followed by surge, while rainfall linked flooding is a minor contributor at well below 1%.
It’s encouraging to see another new sponsor coming to market and finding its need for reinsurance great enough, while market conditions are conducive enough, to look to the capital markets as a source of efficient and multi-year reinsurance protection.
You can read all about this new Charles River Re Ltd. (Series 2024-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.
