Astro Re cat bond shrinks to $40m, at higher-end of pricing

Astro Re cat bond shrinks to $40m, at higher-end of pricing

According to sources, the Astro Re Pte. Ltd. (Series 2021-1) disaster bond, that is being sponsored by U.S. main insurance group Frontline Insurance on behalf of itself and subsidiary First Protective, is set to diminish to $40 million in size, with pricing at the high-end of guidance.As we described recently, issuance of the Astro Re catastrophe bond had been postponed a little bit, with what was at first slated to be a June issuance set to fall under July.
Partially, we were informed that this was because of financier questions, provided that previous cat bonds from the issuer that still have losses establishing versus them.
Were likewise told that traditional, or collateralised, reinsurance has actually proven competitive as well and that the layer of risk initially targeted for the Astro Re catastrophe bond is now anticipated to be split with reinsurance.
When this transaction was very first marketed to feline bond investors about a week into June, sponsor Frontline Insurance was seeking a $100 million or greater source of named storm reinsurance security for itself and subsidiary First Protective.
After the extended marketing of the deal, were told that the issuance has actually now been updated as simply a $40 million offering of notes.
So now, Singapore based special function reinsurance vehicle (SPRV) Astro Re Pte. Ltd. will provide a single Series 2021-1 Class A tranche of notes, currently sized at $40 million, with the notes set to be offered to investors and the earnings utilized to collateralize a reinsurance contract to cover Frontline and First Protective.
The reinsurance cover will be versus losses from called storms throughout the states of Florida, Alabama, Georgia, North Carolina and South Carolina, on an indemnity trigger and per-occurrence basis, across a four-year term to July 2025.
The now $40 million of notes to be released by Astro Re Pte. have a preliminary anticipated loss of 2.9%.
At the launch of this transaction the notes were marketed to cat bond investors with rate guidance in a range from 7.25% to 8%.
Were now informed that the reduced $40 million offering is now being marketed with a voucher of 8%, so the upper-end of the range and reflecting a fairly high multiple to the predicted loss.
So it does seem investors are demanding a little greater coupon from Frontline.
However the truth the catastrophe bond market is sticking to the sponsor and the sponsor sticking with cat bonds and including them in its program is motivating for future prospective concerns from the insurer.
You can check out all about this new Astro Re Pte. Ltd. (Series 2021-1) disaster bond from Frontline and every other feline bond ever provided in our Artemis Deal Directory.

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