Heritage secures Citrus Re 2023-1 cat bond at upsized $235m

Heritage Insurance Holdings, Inc. has now priced its latest catastrophe bond, securing the upsized target of $235 million of reinsurance protection from the Citrus Re Ltd. (Series 2023-1)  named storm deal.

Heritage returned to the catastrophe bond market in early April, as we reported at the time, seeking $180 million or more in US named storm reinsurance from the capital markets with this Citrus Re 2023-1 transaction.

This new Citrus Re 2023-1 catastrophe bond is the eighth issuance under the Citrus name that Heritage has sponsored and we have listed in our extensive Deal Directory.

The Citrus Re 2023-1 cat bond notes will provide Heritage and its subsidiaries with $235 million of US named storm reinsurance protection, on an indemnity trigger and per-occurrence basis, across a three-year term to June 2026.

The original target had been for $180 million of protection and Heritage successfully enlarged both tranches of this issuance, to price the deal to provide $235 million of named storm reinsurance protection for the carrier.

A Class A tranche of notes began at $80 million in size, which was raised to between $100 million and $120 million and we’re now told has secured the upper-end, at $120 million.

With a base expected loss of 1.66%, the Class A notes were at first offered to investors with spread price guidance in a range from 6.75% to 7.75%, but they have now been priced at the low-end of 6.75%, sources said.

What was initially a $100 million Class B tranche of notes was successfully upsized to $115 million.

With a base expected loss of 2.54%, the Class B tranche of notes were first offered to investors with spread price guidance in a range from 9% to 10%, but they have now been priced at the low-end of that range, for a spread of 9% to be paid to investors.

So, Heritage has secured its new Citrus Re 2023-1 catastrophe bond at a 30% larger size that the initial target, while the Class A notes priced down roughly 7% and the Class B notes just over 5%, from their initial guidance mid-points.

You can read all about this Citrus Re Ltd. (Series 2023-1)  catastrophe bond and every other cat bond issued in our extensive Artemis Deal Directory.