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The deal will carry an insurance premium that settled 14% below the sponsor’s initial target. -
The fund will limit capacity to $400mn or 1.5% market share, and minimise exposure to secondary risks.
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The insurer will invest the deal’s collateral in green bonds as well as using its own freed-up capital to allocate to green projects.
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It will look to raise between $240mn and $300mn from the bond which was initially marketed at the bottom end of this range.
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The insurer has a previous history of buying earthquake reinsurance cover from the ILS market.
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The issue, in conjunction with the DaVinci Re sidecar, follows a $400mn sale of the bond last year.
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The carrier has shaved 50 basis points off the projected coupon for the ILW bond.
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It is the Blackstone captive’s first foray into the cat bond market.
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Initially, negotiations are likely to be led by risk takers but there could be a case to model a future role for service providers.
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Nephila was the biggest provider on the 2021 reinsurance programme for Florida Citizens as it wrote a total line of $601mn, comprising 36% of the state-run insurer’s $1.65bn placed private traditional limit.
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The organisation has $170mn less cover in place than the $2.1bn it had for the 2020 and 2019 hurricane seasons.
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The firm announced a gross performance of more than 10% on the fund since it was established in late May 2020.
