AmFam lifts Four Lakes Re catastrophe bond target size to $250m

American Family Mutual Insurance Company (AmFam) is now looking to upsize its latest catastrophe bond, with the target size increasing from $175 million to now $250 million in protection from the Four Lakes Re Ltd. (Series 2024-1)  cat bond issuance.

AmFam returned to the cat bond market in November with a target to secure $175 million in multi-peril reinsurance protection to expand its capital markets backed catastrophe reinsurance.

This will be the seventh catastrophe bond sponsored by American Family that we have listed in the Artemis Deal Directory and the fifth in the Four Lakes Re series from the company, having sponsored an issuance under this name every year since 2020.

Now, we’re told that like most other cat bonds in the market this quarter, AmFam is now looking to upsize its latest, with a target of $250 million of reinsurance now set.

At the same time, we’re told the price guidance for the two tranches of notes on offer has been lowered, again like almost every cat bond recently issued.

With the target now lifted to $250 million, if successfully issued this Four Lakes Re 2024-1 cat bond will provide AmFam with that amount of reinsurance against losses from US named storms, earthquakes, severe thunderstorms, winter storms and wildfires, on a per-occurrence and indemnity trigger basis, running from January 2025 to the end of December 2027.

What was targeted to be a $125 million Class A tranche of Series 2024-1 notes are now being pitched to investors at $175 million in size, we’re told.

The Class A notes have an initial expected loss of 1.64% and were first offered to investors with spread price guidance in a range from 5.75% to 6.5%, but this has now fallen and been fixed at the lower-end of 5.75%, sources said.

What was a $50 million Class B tranche of notes are now targeted at $75 million in size.

The Class B notes have an initial expected loss of 2.77% and were first offered with spread price guidance in a range from 8.5% to 9.25%, but here too the spread has now been fixed at the low-end of 8.5%.

While these sizes and prices aren’t yet finalised or confirmed, we’re told there is a good chance this is now where the deal will be finalised, when it gets priced next week.

So, once again, this looks like a very strong result for another cat bond sponsor, as the catastrophe bond market continues to demonstrate value and competitive pricing, as well as ample capital being available to support sponsors reinsurance needs.

You can read all about this new Four Lakes Re Ltd. (Series 2024-1) catastrophe bond from American Family in the Artemis Deal Directory.