American European targets lower pricing for $125m Charles River Re cat bond
American European Insurance Company is now aiming to reduce the pricing further for its first catastrophe bond deal, with the guidance on the $125 million of Charles River Re Ltd. (Series 2024-1) catastrophe bond notes lowered for a second time.
American European Insurance Company ventured into the catastrophe bond market for its first time in March, aiming to secure at least $100 million in reinsurance for a portfolio of policies underwritten by managing general agent (MGA) ShoreOne Insurance Managers, a coastal property specialist that offers all-perils coverage including flood.
The target was to secure $100 million or more in named storm reinsurance protection, for the subject business sourced through the relationship with ShoreOne.
As we then reported, the target size was increased with up to $125 million of reinsurance being sought from this debut Charles River Re cat bond issuance, while at the same time the price guidance was lowered.
Now, we’re told that the $125 million target size is likely to be achieved, while the price guidance has been reduced again, just the latest catastrophe bond to see its price guidance reduced more than once during marketing in recent weeks.
As a result, we’re now informed that this Charles River Re 2024-1 cat bond is likely to secure American European the upsized $125 million in multi-year named storm reinsurance, to protect the ShoreOne originated book across a three-year term up until April 30th 2027, on a per-occurrence and indemnity trigger basis, covering loss events in the states of Massachusetts, New Jersey, New York and South Carolina.
The now understood to be $125 million of Class A notes come with an initial expected loss of 1.87% and were first offered to cat bond investors with spread pricing in a range from 7% to 7.5%.
As we reported, that range was lowered and updated to new spread guidance of 6.75% to 7%. But we now understand that to have dropped again, with a final range of 6.5% to 6.75% being offered to investors.
Which suggests that American European will secure this capital markets backed reinsurance capacity priced around 8% or more below the initial mid-point of guidance, which would be another very strong result for a first-time catastrophe bond sponsor.
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.
