NCIUA returns for $100m Cape Lookout Re 2021 cat bond

NCIUA returns for $100m Cape Lookout Re 2021 cat bond

The North Carolina Insurance Underwriting Association (NCIUA) is back in the disaster bond market with its first issuance of 2021, a presently $100 million Cape Lookout Re Ltd. (Series 2021-1) deal that will sit in the higher layers of its reinsurance tower.The North Carolina Insurance Underwriting Association (NCIUA) is a coastal home insurance coverage underwriting pool for the state of North Carolina.
The NCIUA has been checking out the capital markets to source disaster reinsurance for over a years, with reasonably regular issues given that its first feline bond Parkton Re Ltd., which it had actually sponsored together with the states Joint Underwriting Association.
In 2019, the NCIUA sponsored two catastrophe bonds, a $450 million Cape Lookout Re Ltd. (Series 2019-1) feline bond that sat higher up in its reinsurance tower and then a $100 million Cape Lookout Re Ltd. (Series 2019-2) feline bond that sat lower down and so was riskier.
For its first see to the cat bond market for 2021, the NCIUAs special function insurance company (SPI) Cape Lookout Re Ltd. will seek to issue a $100 million or bigger tranche of notes, which will be offered to investors to protect multi-peril and multi-year collateralized reinsurance for the insurance coverage underwriting swimming pool.
The NCIUA is when again dealing with the assistance of international reinsurance company Hannover Re, who will front the capital markets on its behalf as delivering reinsurer for the deal.
Cape Lookout Re Ltd. will provide a $100 million or bigger tranche of Series 2021-1 notes, that will be offered to financiers and the proceeds utilized to collateralize a retrocessional reinsurance arrangement in between the provider and Hannover Re, who will in turn pass on the reinsurance to the NCIUA.
The protection is for losses from called storms and serious thunderstorms to the NCIUAs portfolio in the state of North Carolina, across a three-year term and on a yearly aggregate and indemnity trigger basis, were informed.
This new Cape Lookout Re 2021-1 catastrophe bond is especially remote danger, as it will connect at $2.35 billion of losses and exhaust at $2.85 billion of losses, so covering a portion of a $500 million layer of the NCIUAs reinsurance program, offering ample space to upsize if market conditions are favorable.
The $100 million of Series 2021-1 Class A notes will have a preliminary predicted loss of 1.04% and are being marketed to feline bond investors with discount coupon assistance in a range from 3.5% to 4%, we understand.
For contrast, the Cape Lookout Re 2019-1 feline bond had an initial predicted loss of 1.61% and priced at 4.25%, while the 2019-2 issuance had an initial anticipated loss of 2.52% and paid investors a 6.75% voucher at launch.
It looks like there is a guaranteed rates uptick in this most current NCIUA cat bond, provided the much higher attachment point.
Well keep you upgraded as this latest disaster bond comes to market and you can read all about the Cape Lookout Re Ltd. (Series 2021-1) transaction and every other cat bond in our Artemis Deal Directory.

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