NCIUA secures its largest cat bond at $600m, as Cape Lookout Re 2025-1 priced

The North Carolina Insurance Underwriting Association (NCIUA) has now secured its largest catastrophe bond yet, as the Cape Lookout Re Ltd. (Series 2025-1) issuance has been priced at the almost doubled $600 million issuance size, while pricing of the notes was finalised just below the mid-point of initial guidance, Artemis can report.

Earlier in February, the North Carolina Insurance Underwriting Association (NCIUA) came back to the capital markets seeking $350 million of annual aggregate named storm reinsurance protection from what will be its seventh catastrophe bond under its Cape Lookout Re Ltd. program of deals.

We then reported that this new Series 2025-1 cat bond was expected to become the largest cat bond in the Cape Lookout Re program of deals with the target size raised to $600 million, while at the same time the price guidance was narrowed.

Now, we’ve learned from sources that the notes have been priced just below the initial mid-point of guidance, while the upsized and almost doubled $600 million of reinsurance has now been secured from the cat bond for the NCIUA.

As a result, Cape Lookout Re Ltd., the NCIUA’s Bermuda-based special purpose insurer (SPI), will issue a single $600 million, tranche of Series 2025-1 Class A notes.

These notes will provide the sponsor with a source of indemnity and annual aggregate reinsurance protection from the capital markets, covering named storm losses in its state of North Carolina across a three year term.

The Cape Lookout Re Series 2025-1 Class A cat bond notes come with an initial expected loss of 2.24% and were first offered with price guidance in a range from 6.75% to 7.25, which was later narrowed to between 6.9% and 7.25%.

We’re now told that the $600 million of Class A notes have been priced to pay investors a spread of 6.9%, so just below the mid-point of the initially offered guidance range.

Last year’s Cape Lookout Re 2024-1 cat bond had an initial expected loss of 2.56% and priced to pay investors a spread of 8%, so a multiple-at-market of 3.125 times the EL.

This new 2025 cat bond will have a multiple-at-market of 3.08 times EL, so not that different and given it has a slightly lower expected loss anyway, this seems closely aligned, perhaps because this is an aggregate deal.

As we explained before, this new NCIUA catastrophe bond will sit at an attachment of $2.8 billion of losses, participating in a layer of the reinsurance tower to $3.4 billion, so as we said there was always a chance it could fill the entire layer, which now looks set to be the case.

Now finalised at $600 million in size, the NCIUA will benefit from cat bond backed reinsurance protection in its reinsurance tower running from $2.35 billion right the way up to $3.75 billion for the coming hurricane season, thanks to other cat bonds also still in-force.

You can read all about this new Cape Lookout Re Ltd. (Series 2025-1) transaction and every other cat bond ever issued in our Artemis Deal Directory.