Progressive looks to reduce price further for $345m Bonanza Re 2024-1 cat bond

US insurance firm Progressive is targeting even more favourable price execution for its latest venture to the catastrophe bond market, with the spread guidance for its new $345 million Bonanza Re Ltd. (Series 2024-1) issuance having fallen further in the latest update, we understand.

Progressive returned to the cat bond market in late November, with what will be the eighth catastrophe bond under the Bonanza Re name.

Initially, the insurer was seeking a $225 million source of capital markets backed protection on both a aggregate and occurrence basis from its latest catastrophe bond.

We’re now told that Progressive looks set to be the latest to benefit from strong investor demand, as the company has now lifted the target size of this Bonanza Re 2024-1 cat bond issuance to $345 million.

We then reported earlier this week that Progressive looks set to be the latest cat bond sponsor to benefit from strong investor demand, with the target size of this Bonanza Re 2024-1 cat bond issuance raised to $345 million while at the same time the price guidance fell.

Now, we’re told the size target remains for $345 million of multi-peril reinsurance, but for a second time the price guidance has fallen.

This Bonanza Re 2024-1 cat bond will ultimately provide its sponsor with one year of aggregate reinsurance and three years of occurrence coverage, across the perils of named storm, earthquake (fire-following only), severe thunderstorm, winter storm, wildfire in the United States.

The upsized to $70 million tranche of zero-coupon discount Class A notes will provide aggregate coverage across just a single year through 2025, and have two sections with a shared limit, one focused on multi-peril cover and the other named storm only.

The Class A tranche of notes have an initial expected loss of 4.09% and were first offered to cat bond investors with price guidance of 79% to 77% of par, a rough spread equivalent of 21% to 23%, which was then reduced to a range of 80% to 79% of par, an effective spread equivalent of 20% to 21%, but we’re now told this has been fixed at 80% of par, so a spread equivalent of 20%.

The other two tranches of notes will provide Progressive with three calendar years of indemnity and per-occurrence multi-peril reinsurance protection to the end of 2027.

The Class B tranche of notes remain at their initial $75 million in size, with an initial expected loss of 0.76%. They were at first offered with price guidance of between 4.5% and 5.25%, but that was lowered to a new range of 4% to 4.45%, and now we’re told the guidance has fallen further to between 3.75% and 4%.

The upsized to $200 million tranche of Class C notes have an initial expected loss of 1.82%. They were first offered with spread price guidance of between 6.5% and 7.25%, which then fell to a new range of between 6% and 6.5%, and now has been lowered further to between 5.5% and 6%.

Progressive remains on course to secure a significantly upsized and priced down slice of reinsurance from the catastrophe bond market, as the latest sponsor to benefit from the very strong execution being seen in the marketplace at this time.

You can read all about this Bonanza Re Ltd. (Series 2024-1) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.