Andover Companies seeks upsize to $175m for Locke Tavern Re cat bond

The Andover Companies, a large mutual insurance group in the Northeast US, has increased the target size for its debut Locke Tavern Re Ltd. (Series 2023-1) catastrophe bond issuance, with now up to $175 million of reinsurance sought from the deal.

At the same time, we’re told the pricing guidance for the first Andover Companies catastrophe bond has now been lowered, with a chance that this debut cat bond prices below the initial spread guidance for the insurance group.

As we reported at the end of February, the insurer entered the catastrophe bond market for the first time with a target to secure $125 million of collateralized and multi-year reinsurance from this Locke Tavern Re cat bond.

The Locke Tavern Re Ltd. 2023-1 catastrophe bond issuance seeks multi-peril US northeast catastrophe reinsurance, on a fully-collateralized and per-occurrence basis using an indemnity trigger, across a three-year term for the Andover Companies underwriting insurers.

We’re now told by sources that the sponsors target for its debut Locke Tavern Re cat bond has been lifted, with now between $125 million and $175 million of reinsurance aimed for.

The notes to be issued come with an initial base expected loss of 0.919% and were first offered to cat bond funds and investors with spread guidance in a range from 5.5% to 6.25%.

We’re now also told that this price guidance has been reduced, with the notes now offered with a spread of between 5% and 5.5%.

So there’s a strong chance that the Andover Companies has a very positive first cat bond sponsorship experience, with a possible 40% upsizing of the Locke Tavern Re cat bond and pricing set to come in at the low-end of initial guidance, or even better, for the insurer.

We’ll update you when final size and pricing are known later this week.

You can read all about this new Locke Tavern Re Ltd. (Series 2023-1) catastrophe bond, as well as details on over 900 other cat bond transactions in the extensive Artemis Deal Directory.