GeoVera aims to upsize new Veraison Re quake cat bond 75% to $175m

GeoVera Insurance Holdings, Ltd., a specialty earthquake-focused residential property insurance company, is now aiming to secure an upsized $175 million or more in US earthquake reinsurance via its new Veraison Re Ltd. (Series 2024-1) catastrophe bond issuance.

At the same time as looking to upsize the Veraison Re 2024-1 catastrophe bond issuance by 75% from the initial $100 million target, GeoVera is also targeting a reduced level of pricing, with spread guidance now lowered, we are told.

GeoVera returned to the catastrophe bond market for the second time a few weeks ago, seeking to secure $100 million or more in earthquake reinsurance from the Veraison Re 2024-1 deal.

GeoVera had sponsored its debut catastrophe bond in late 2022, which secured it $150 million of collateralized US earthquake reinsurance with the Veraison Re 2023-1 cat bond.

For 2024, GeoVera is again using its Bermuda licensed special purpose insurer (SPI) Veraison Re Ltd. and was initially offering investors a single $100 million tranche of Series 2024-1 Class A notes that would be exposed to losses from US earthquakes.

We’re now told the issuance target size has been increased by 75%, with GeoVera now aiming to secure $175 million in US quake reinsurance with this deal.

The Veraison Re 2024-1 cat bond will cover GeoVera’s underwriting entities against losses from US earthquakes over a three year term running from March 1st, on an indemnity trigger and per-occurrence basis.

The now $175 million of Class A notes on offer, would attach their reinsurance coverage for a US earthquake event that exceeded $700 million in losses to GeoVera, covering a now larger percentage of losses up to an exhaustion point of $950 million.

The Veraison Re 2024-1 Class A cat bond notes will have an initial expected loss of 1% and were at first offered to cat bond investors with spread guidance in a range from 5% to 5.5%.

We’re now told the spread guidance has been lowered, with a revised and narrower range of between 4.75% and 5% offered to cat bond investors.

As a result, the pricing for this new Veraison Re 2024-1 catastrophe bond looks set to be significantly better for GeoVera than its late 2022 cat bond, which was issued when the market was facing some disruption in the wake of hurricane Ian and other global capital market challenges.

For comparison, the most comparable tranche of notes of the December 2022 Veraison Re 2023-1 cat bond had an initial expected loss of 0.65% and priced to pay investors a spread of 6.5%.

As a result, the risk-adjusted pricing of this new cat bond looks significantly better for GeoVera, with the multiple-at-market now set to be roughly half what was seen with its debut cat bond deal.

You can read all about this Veraison Re Ltd. (Series 2024-1) in the extensive Artemis Deal Directory that includes details on almost every cat bond ever issued.