Sponsors increased cat bond deal sizes by 60% on average last week across the nine notes that placed, as pricing dropped 10% below mid-point targets on a weighted average basis.
Excluding the three notes where there was no change in limit, the deal size increased by 84% on a weighted average basis, albeit off relatively low baselines for individual tranches.
With the upsizing, Floridian American Integrity secured $565mn from its latest ILS deal – its largest to date, which CEO Robert Ritchie said on LinkedIn marked “robust confidence ... in the Florida market”.
Security First was able to upsize its Class A First Coast Re IV 2025-1 note by 67% to $100mn, with spread falling 20% below the initial midpoint of guidance.
The bond will provide indemnity, cascading, per-occurrence coverage against named Florida storms.
Security First is paying a 28% lower spread, on an absolute basis, and a significantly lower multiple for a similar risk deal on this year’s issuance versus a comparative deal placed two years ago.
The 2025 Class A note is paying a spread of 650 basis points (bps) and a multiple of 4.3x, with an expected loss of 1.50%.
Back in 2023, it paid 900bps and a multiple of 6.34x on the expected loss of 1.42%.
Kin Interinsurance increased the target size of its Class A Hestia Re bond, while target pricing at the mid-point dropped on its Class A and B notes.
The bond will provide named Florida storm protection on an indemnity, per occurrence basis.
The sponsor is targeting more attractive pricing for a significantly riskier deal than a comparative note placed in 2023.
This year’s Class A note is offering a mid-point spread of 700bps and a mid-point multiple of 4.1x the sensitivity case expected loss of 1.72%.
The 2023 issuance paid a spread of 900bps and a multiple of 8.2x, with a sensitivity case expected loss of 1.18%.
Meanwhile, some additional $425mn of limit entered the market across three separate deals, including a renewal of the Yosemite deal for E&S carrier Core Specialty and another Florida domestic deal from Heritage.
Heritage is seeking $100mn of named storm coverage in Alabama, Florida, Georgia, Mississippi, North Carolina and South Carolina for the Class A note on an indemnity, per occurrence basis.
For the Class B note, Heritage and subsidiary Zephyr are seeking $100mn of named storm coverage in Hawaii on an indemnity, per occurrence basis.
Heritage acquired Hawaiian specialty carrier Zephyr in 2016.