Progressive’s ARX prices Bonanza Re cat bond with 40% upsize to $70m

Progressive-owned ARX Holding, the parent of American Strategic Insurance Group, has successfully upsized its latest catastrophe bond issuance by 40% to secure $70 million in multi-peril catastrophe reinsurance from the Bonanza Re Ltd. (Series 2023-2) transaction.

The insurer returned to the cat bond market at the start of this month, seeking to sponsor issuance of its second catastrophe bond of 2023, to secure an initially targeted as $50 million single-year source of additional multi-peril catastrophe reinsurance.

As we then reported this morning, the guidance was updated for the issuance, with Progressive’s ARX Holding seeking from $60 million to $70 million of cover, while the price guidance lifted higher at the same time.

Now, with the upsizing by 40% confirmed, Bonanza Re Ltd. will issue a $70 million in size single tranche of zero-coupon notes to provide collateralized indemnity and annual aggregate reinsurance for the Progressive insurance companies (we understand known as Progressive Home), against losses from the perils of US named storms, earthquakes, severe thunderstorms, winter storm, and wildfires, across a single year through 2024.

This Bonanza Re 2023-2 cat bond features a two section approach to reinsurance coverage, with an attachment at $425 million for named storm events and $525 million for all other perils, while covering the ARX Holding insurers, including American Strategic.

The now $70 million of Bonanza Re Series 2023-2 Class A zero-coupon notes have an initial expected loss of 2.28%, and were first offered with price guidance of between 80% and 79% of par, a rough 20% to 21% spread equivalent.

As we reported this morning, that offering price was raised to 77% of par, which would reflect a rough spread of 23%.

We can now reveal that this is where the notes have been priced, meaning the Bonanza Re 2023-2 catastrophe bond issuance was successfully upsized, but at higher than initially targeted pricing.

We’ve seen this occur a number of times through recent weeks, as the cat bond investor community looks to hold the line on market pricing, especially for riskier and aggregate deals, such as this.

You can read all about this Bonanza Re Ltd. (Series 2023-2) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.