Brookfield targets lower pricing for debut Aragonite Re property cat bond
Brookfield Corporation, the alternative investment manager and multinational from Canada, is now aiming to secure its debut catastrophe bond at lower pricing, with the still $100 million Aragonite Re Ltd. (Series 2024-1) deal seeing its risk interest spread guidance reduced.
Brookfield Corporation entered the catastrophe bond market for the first time in March, looking to secure property catastrophe insurance from the capital markets for its Brookfield Property Group arm and related entities.
The company will utilise its captive insurer as an intermediary, to front the catastrophe bond issuer for the reinsurance agreement and then pass that on as insurance through the Brookfield Property Group insurance tower.
As we explained, Brookfield is following in the footsteps of Blackstone, which was the first investment firm to secure catastrophe insurance for its property insurance investment portfolios through the catastrophe bond market and its real estate captive insurer, having sponsored two Wrigley Re cat bond deals.
Using Bermuda based Aragonite Re Ltd., Brookfield is still aiming for $100 million of Series 2024-1 Class A notes to be issued, so we understand there’s been no change in the size of this first cat bond for the corporation, so far.
The sale of the notes will be used to collateralize a reinsurance agreement with Obsidian Mutual IC, which is a protected cell of Brookfield’s Vermont based captive insurer Slate Management LLC, with the cover then cascading down as insurance to the Brookfield Property Group, covering all of Brookfield’s real estate and property investments.
Through this Aragonite Re 2024-1 catastrophe bond, Brookfield will benefit from a multi-year source of North American named storm and earthquake insurance protection to Brookfield, providing per-occurrence and indemnity trigger protection across the US and Canada, while running across three annual risk periods to March 30th 2027.
The $100 million of Class A notes come with an initial expected loss of 0.59% and were first offered to cat bond investors with spread price guidance in a range from 5.75% to 6.50%.
We’re now told that the price guidance has been lowered, with a new range of spreads from 5.5% to 5.75% on offer.
So, Brookfield is aiming to price its debut Aragonite Re catastrophe bond at, or below, the low-end of the initial price guidance, which would be a strong result for the new market entrant.
You can read all about this new Aragonite Re Ltd. (Series 2024-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.
