Florida Peninsula gets upsized $150m Palm Re cat bond, priced down 11%

Florida Peninsula Insurance Company has now finalised details for its debut and upsized $150 million named storm reinsurance catastrophe bond deal, Palm Re Ltd. (Series 2024-1), with the notes pricing at a level almost 11% below the mid-point of initial guidance.

Florida Peninsula Insurance Company began its first foray in the catastrophe bond market for its debut issuance just over a fortnight ago, as we reported.

At first, the target was to secure just $100 million of named storm reinsurance from the first Palm Re cat bond deal, but as we then also wrote that target was lifted with up to $150 million of coverage then being sought and at the same time the price guidance was lowered for the first time.

In our next update on this Palm Re cat bond, we reported that the target size had been fixed at that 50% upsized level of $150 million, while the price guidance has been reduced further still.

Now, we’re told that all details have been finalised, with the Palm Re 2024-1 catastrophe bond issuance now confirmed at the upsized $150 million size, while pricing will be finalised at the bottom end of the twice reduced guidance ranges.

The $150 million of reinsurance protection from this Palm Re cat bond will provide Florida Peninsula and subsidiary Edison Insurance named storm cover for the state of Florida, on a per-occurrence and indemnity trigger basis across a three-year term, from June 1st 2024, through May 31st 2027.

The $150 million of Palm Re Series 2024-1 Class A cat bond notes come with an initial base expected loss of 1.78%.

The notes were first offered to investors with spread price guidance in a range from 10.25% to 11%, but as we then reported that price guidance was lowered to an updated range of 9.75% to 10.25% and then in our second report we said that the last price range on offer was for a spread of between 9.5% and 9.75% to be paid to investors.

We are now told by sources that the pricing has been finalised at the lowest end of the twice reduced guidance, with the $150 million of Palm Re 2024-1 Class A notes set to pay investors a spread of 9.5%.

Which represents a more than 1.1% drop in the actual spread while the deal was marketing and the final price is almost 11% below the mid-point of the initial guidance.

As a result, for its debut catastrophe bond, Florida Peninsula will secure 50% more in reinsurance than the initial target, priced around 11% below the mid-point of initial spread guidance.

Another strong result for a first time cat bond sponsor, but still offering investors a multiple-at-market of 5.34 times the expected loss.

You can read all about this new Palm Re Ltd. (Series 2024-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.