The Hartford returns for first cat bond since 2011, a $200m Foundation Re IV

US primary property and casualty insurer The Hartford is back in the catastrophe bond market for the first time since 2011, seeking a new $200 million source of multi-peril catastrophe reinsurance through sponsorship of a Foundation Re IV Ltd. (Series 2023-1) cat bond issuance.

The Hartford, through its Hartford Fire Insurance entity, had previously sponsored a string of Foundation Re cat bond deals from 2004 up to the last which we covered back in 2011.

Now, the company has returned to the catastrophe bond market in search of fully-collateralized peak peril catastrophe reinsurance protection on a multi-year basis, from the capital markets.

It’s yet another encouraging signal for the cat bond market, that major insurers are returning in 2023 as the market offers effective price execution for their reinsurance needs.

For its first catastrophe bond issuance in over a decade, The Hartford has established a Bermuda-based issuer named Foundation Re IV Ltd.

Foundation Re IV Ltd. will issue a single tranche of Series 2023-1 Class A catastrophe bond notes that will be sold to investors and the proceeds used to collateralize a reinsurance agreement between the issuer and ceding company, with the beneficiaries being Hartford Fire Insurance Co. and subsidiaries, we understand.

Targeting $200 million with this issuance, the Hartford is seeking collateralized US named storm and earthquake protection, across a three calendar year term running the the end of 2026.

The protection will be on an indemnity trigger and per-occurrence basis, we are told, which is a change from its older Foundation Re cat bonds, that had all provided industry loss based protection to the Hartford.

Sources said the notes would attach their coverage at an attachment of $1.1 billion of losses and cover a share up to $1.4 billion,suggesting there is some room for this new cat bond from the Hartford to upsize.

The $200 million of Series 2023-1 Class A notes being issued by Foundation Re IV Ltd. will come with an initial attachment probability of 1.67%, an initial expected loss of 1.36% and are being offered to cat bond investors with spread price guidance in a range from 6% to 6.75%, we’re told.

It’s very encouraging to see a major US insurance player such as The Hartford coming back to the catastrophe bond market after such a long time away from it.

Given the maturity of the company and its reinsurance buying strategies, it’s clear that The Hartford finds the cat bond market more attractive this year, which could be a pricing signal, or simply a signal of rising demand for higher-layer, tail-risk type coverage.

You can read all about this new Foundation Re IV Ltd. (Series 2023-1) cat bond transaction in our Deal Directory, where you can analyse details of almost every catastrophe bond ever issued.