Acorn Re parametric quake cat bond target raised to $475m

Acorn Re parametric quake cat bond target raised to $475m

The target size for the second renewal of the parametric catastrophe bond that supplies earthquake associated employees compensation security to benefit the Kaiser Permanente health group has been increased, with the Acorn Re Ltd. (Series 2021-1) transaction now expected to secure $475 countless capital market-backed capability for the covered parties.This Acorn Re 2021-1 catastrophe bond now looks set to more than renew the soon to mature $400 million Acorn Re Ltd. (Series 2018-1) transaction, with coverage really similar to the ending deal.
Like the previous two Acorn Re cat bond offers, Hannover Re is serving as ceding reinsurance business once again, sitting in front of a single called delivering insurer, Oak Tree Assurance Ltd
. Oak Tree Assurance Ltd. is the Vermont-domiciled workers compensation captive owned by the Kaiser Permanente group of health insurance companies.
So this 2nd renewal of the Acorn Re U.S. west-coast parametric earthquake cat bond will eventually supply coverage mostly for the Kaiser employees payment captives insured exposure to earthquake risks.
But the Acorn Re 2021-1 feline bond likewise offers some defense to other Hannover Re reinsureds that have exposure within the parametric earthquake box too, the same as the 2015 and 2018 deals.
When this offer released to financiers nearly 2 weeks ago it was targeted as a $400 million issuance of notes.
Now, were informed that the issuance size looks most likely to increase to $475 million, with prices most likely to come in at the lower-end of preliminary discount coupon guidance.
Now, Acorn Re Ltd., the Bermuda domiciled unique function insurance vehicle, is anticipated to issue a single $475 million tranche of Series 2021-1 Class A notes.
As a result, the Acorn Re 2021-1 cat bond notes are expected to supply the covered celebrations, Kaiser Permanente by means of the Oak Tree Assurance Ltd. workers settlement captive, and other reinsureds of Hannover Re, with a $475 million source of capital markets source of per-occurrence parametric reinsurance security against earthquakes that strike the U.S. west coast area throughout a three-year duration.
The now $475 million of Series 2021-1 notes provided by Acorn Re Ltd. have an annualised attachment possibility of 1.2% and an annualised expected loss of 0.89%.
The cost guidance they released with was from 2.5% to 3%, however were now informed this cat bond is anticipated to settle at the low-end, to pay investors a 2.5% discount coupon.
That would be a multiple-at-market of 2.8 times the anticipated loss.
This compares to the Acorn Re 2018-1 cat bond, which priced at 2.75% with a predicted loss of around 0.81%, so had a multiple of approximately 3.4 times the EL and the Acorn Re 2015-1 cat bond notes that paid a 3.4% voucher on an anticipated loss of 0.74%, so offered a nearly 4.6 times EL multiple.
Which suggests even more softening thanks to sufficient financier appetite for this renewal cat bond offer, compared to the previous issuances under the same program.
More underscoring the value the cat bond market holds for those looking for reinsurance and retrocession at this time and suggesting we might see keen prices as we move through the anticipated to be busy fourth-quarter of issuance.
At this stage it appears this is how this brand-new Acorn Re feline bond will settle, however well update you must anything change.
You check out everything about this brand-new Acorn Re Ltd. (Series 2021-1) deal and every other catastrophe bond in the Artemis Deal Directory.

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