Kin targets lower pricing for new Hestia Re 2023 catastrophe bond

Direct-to-consumer and fast-growing insurtech company Kin Insurance is aiming to reduce the pricing on its new catastrophe bond issuance, with the spread guidance dropping for its Hestia Re Ltd. (Series 2023-1) transaction.

Kin returned to the catastrophe bond market for what will be its second issuance in February, seeking $100 million or more in Florida named storm reinsurance protection from the capital markets.

We’re now told that the target size remains the same for Kin’s second Hestia Re cat bond deal, with $100 million still being sought at the latest update.

But Kin hopes to reduce the cost of its capital markets backed reinsurance somewhat, with the spread guidance having been lowered.

The still $100 million of Hestia Re 2013-1 Class A notes being offered will provide Kin with a three-year source of fully-collateralized Florida named storm reinsurance, on a indemnity trigger and per-occurrence basis.

The Hestia Re 2023-1 Class A cat bond notes come with an initial base expected loss of 1.04% and were initially offered to cat bond investors with price guidance in a range from 10.5% to 11.5%.

We’re now told that the price guidance has been lowered to below that range, with a target now set for the cat bond deal to settle paying investors a spread in the 10% to 10.5% range.

At which level the multiple-at-market will remain high and close to double that of Kin’s first Hestia Re cat bond deal.

As a reminder, Kin had secured its debut $175 million Hestia Re 2022-1 catastrophe bond cover back in April 2022, but that deal is not completely out of the woods, in regards to potential exposure to hurricane Ian, as we reported recently.