Great American returns for $200m Riverfront Re 2021 cat bond

Great American returns for $200m Riverfront Re 2021 cat bond

Fantastic American Insurance Group has returned to insurance-linked securities (ILS) for what will be its 3rd and likely biggest catastrophe bond issuance, with a $200 million Riverfront Re Ltd. (Series 2021-1) transaction now being offered to the ILS markets investor-base. Great American Insurance Group, which is the insurance operations part of American Financial Group, got in the catastrophe bond market in search of capital markets backed reinsurance for the very first time in 2014 with a $95 million Riverfront Re Ltd. (Series 2014-1) deal that grew at the end of 2016.
This protection was then restored and upsized in May 2017 with a $190 million Riverfront Re Ltd. (Series 2017-1) transaction that grew at the end of 2020.
Now, Great American Insurance is back with another brand-new cat bond in advance of the United States called storm season, this time looking for at least $200 countless multi-peril and fully-collateralized reinsurance from a Riverfront Re 2021 issuance.
Riverfront Re Ltd., a Bermuda domiciled special function insurer (SPI), will seek to issue two tranches of notes that will be offered to ILS financiers and the proceeds used to collateralize 2 reinsurance contracts between the SPI and sponsor Great American.
The two tranches of notes will both supply Great American Insurance with multi-year collateralized reinsurance defense from the capital markets across an approximately three and a half year term, to end of December 2024, we understand.
The reinsurance defense supplied will be on a per-occurrence basis from both tranches released, while the covered perils are the same as the 2017 transaction, being U.S. and Canada called storms, earthquakes, severe thunderstorms, winter storms, wildfires, meteorite impact, and volcanic eruption.
Riverfront Re will provide a tranche of Class A notes that are targeted to be at least $150 million in size and will cover losses from an attachment point of $200m up to fatigue at $450m, providing space for some upsizing, were told.
The Class A notes will have a preliminary expected loss of 0.92% and are being used to cat bond financiers with price guidance of 3.75% to 4.5%.
A Class B tranche is presently sized at $50 million and will cover losses from an accessory point of $125m, up to an exhaustion point of $200m, so sit beneath the A notes and are riskier as a result. Again there is some space for upsizing.
The riskier Class B notes will have an initial anticipated loss of 2.65% and are being used to cat bond financiers with price guidance of 6.5% to 7.5%, we understand.
The disaster bonds will supply Great American Insurance with reinsurance throughout a subset of its commercial home insurance coverage book, sources said and also cover certain losses from affiliates of the insurance provider, consisting of National Interstate Insurance and Mid-Continent Casualty.
Its motivating to see Great American Insurance back and making catastrophe bonds a core piece of its reinsurance program, with a new Riverfront Re issuance that looks most likely to be its largest yet and has space to upsize ought to financier need allow.
Well keep you updated as this new Riverfront Re Ltd. (Series 2021-1) cat bond deal comes to market and you can read all about this and every other disaster bond in the Artemis Deal Directory.

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