Tower Hill targets debut $200m Winston Re Florida named storm cat bond

Tower Hill Insurance Exchange, a Florida homeowners and commercial property insurance underwriter, has entered the catastrophe bond market with its debut transaction, seeking $200 million or more in Florida named storm reinsurance from this Winston Re Ltd. (Series 2024-1) issuance.

Tower Hill Insurance Exchange buys a significant catastrophe reinsurance tower, having renewed it at close to $2 billion in size at the mid-year of 2023.

With significant property exposure in the state of Florida, the carrier is also growing there and adding more reinsurance from the capital markets can help in diversifying its reinsurance panel and building out its coverage, hence venturing to the catastrophe bond market for the first time in 2024.

This catastrophe bond is also notable as our data shows it to be the first cat bond issuance where broker-dealer Howden Tiger Capital Markets & Advisory is acting as both the sole structuring agent and the sole bookrunner, with the company having typically either shared responsibilities, or only acted in one of the roles, in the past. View Artemis’ cat bond bank and broker league table here.

For Tower Hill’s first cat bond, a Bermuda based company named Winston Re Ltd. has been established for Tower Hill’s debut catastrophe bond.

We’ve been told that Winston Re Ltd. will look to issue two tranches of notes, totalling $200 million across two tranches, to be sold to investors and the proceeds used to collateralize the reinsurance agreements with Tower Hill.

The Winston Re 2024-1 catastrophe bond will provide Tower Hill with reinsurance protection against named storm losses in Florida, on an indemnity and per-occurrence basis, over a three hurricane season term, starting from June 2024 and with maturity due in February 2027, we understand.

A $100 million tranche of Class A notes will provide Tower Hill with reinsurance protection from an $850 million attachment point to exhaustion at $1.1 billion of losses, giving them an initial attachment probability of 1.73%, an initial expected loss of 1.56% and these notes are offered to investors with spread guidance in a range from 10% to 11%.

An also $100 million Class B tranche of notes are riskier and will sit beneath the Class A’s, attaching at $600 million and covering losses to $850 million, giving them an initial attachment probability of 2.28%, an initial expected loss of 1.97% and these notes are offered to investors with spread guidance in a range from 11.75% to 12.75%.

It’s encouraging to see another first-time cat bond sponsor coming to market and also useful for investors to see a pure Florida hurricane cat bond offering well in advance of the more typical time for Florida cat bonds to come to market, as this will provide some signals of price and investor appetite.

You can read all about this Winston Re Ltd. (Series 2024-1) in the extensive Artemis Deal Directory that includes details on almost every cat bond ever issued.