NCIUA gets Cape Lookout Re 2024-1 cat bond at upsized $450m, with low-end pricing

The North Carolina Insurance Underwriting Association (NCIUA) has successfully upsized its latest catastrophe bond transaction by 80%, securing the top-end target for $450 million of named storm reinsurance from the Cape Lookout Re Ltd. (Series 2024-1) issuance, this publication understands.

Initially, the NCIUA returned to the catastrophe bond market with a $250 million target for its latest issuance.

But, as we later reported, the target size was increased with up to 80% more in reinsurance sought, while the price guidance was reduced at the same time.

Now, we’ve been told that the NCIUA will finalise its new Cape Lookout Re 2024-1 catastrophe bond to provide it the 80% upsized $450 million in multi-year named storm reinsurance, while the notes will be priced today with a spread at the bottom of reduced guidance.

So, Cape Lookout Re Ltd., the North Carolina Insurance Underwriting Association’s Bermuda-based special purpose insurer, will now issue a single, $450 million, tranche of Series 2024-1 Class A notes to provide a new source of capital market’s backed reinsurance to the NCIUA.

The $450 million in notes will provide the NCIUA with a source of indemnity and annual aggregate reinsurance protection against named storm losses, covering the insurer across a three year term, with qualifying losses needing to drive a $25 million or greater impact to the insurer of last resort to count towards the aggregated total.

The Cape Lookout Re Series 2024-1 Class A cat bond notes come with an initial expected loss of 2.56%.

They were initially offered with spread price guidance in a range from 8% to 9%, which was then lowered and narrowed to between 8% and 8.25%,.

We’re now told the $450 million of notes will price at the low-end of 8%, so the bottom of the initial spread guidance range.

The NCIUA has taken full advantage of cat bond investors appetites to grow the cat bond contribution to its reinsurance tower this year.

This new 2024-1 issuance is the North Carolina Insurance Underwriting Association’s (NCIUA) sixth catastrophe bond under the Cape Lookout Re Ltd. program of deals.

But, the NCIUA has now sponsored catastrophe bonds since at least 2009, when the first cat bond to benefit the Association, Parkton Re Ltd, came to market.

This new $450 million of Series 2024-1 notes will sit between two other cat bonds sponsored by the NCIUA, the $330 million Cape Lookout Re Ltd. (Series 2022-1) sitting beneath the 2024-1 notes and the $350 million Cape Lookout Re Ltd. (Series 2023-1) sitting directly above it.

Which means that, thanks to this new cat bond having upsized significantly, across the NCIUA’s roughly $2.1 billion reinsurance tower, catastrophe bonds are set to make up $1.13 billion of the coverage it has in-force for 2024.

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