Florida’s Citizens Property Insurance Corporation is back in the disaster bond market with a dual-series issuance of Everglades Re II Ltd. (Series 2023-1 & 2023-2) notes, looking for collateralized reinsurance for both its Coastal and Personal Lines Accounts for the upcoming wind season just.
We reported back in March that in addition to the Lightning Re cat bond we anticipated Florida Citizens to sponsor an indemnity Everglades cat bond too, if market conditions contributed.
As expected, the insurance company is now back with a dual-series of Everglades Re II Ltd. notes available to cat bond financiers, although these are being released as discount rate notes (to the initial principal quantity), so without a discount coupon and more similar to zero-coupon, we’re informed.
The target is to secure $200 million or more of collateralized called storm reinsurance from the capital markets, to supply cover to the Florida Citizens Coastal and Personal Lines Accounts, with one Series of notes targeted for each Account.
Both Series of notes being released will supply Florida Citizens with called storm reinsurance security, on an indemnity and yearly aggregate basis, however just till January 8th 2024 we comprehend.
This is since Florida Citizens is set to combine its 3 accounts (Coastal Account, Personal Lines Account and Commercial Lines Account) into a single Citizens Account, efficiently transitioning its reinsurance structure from 3 towers into a single one for future years.
So these cat bonds are being released as zero-coupon for this factor, as they are just set to be on-risk for a single wind season, it appears.
A Series 2023-1 Class A tranche of notes are sized at $100 million, to supply aggregate reinsurance to the Citizens Coastal Account, which includes personal and industrial property wind and multi-peril policies, we’re informed.
The Series 2023-1 Class A notes will cover Citizens for losses from an accessory point of $4.01 billion, tiring at $5.18 billion, providing a preliminary accessory point of 1.92%, a preliminary base anticipated loss of 1.59% and these notes are being used with rate assistance in a variety from 88.25% to 88.75% of the initial principal (a rough 11.25% to 11.75% comparable to a rate-on-line or voucher).
A Series 2023-2 Class A tranche of notes are sized at $100 million, to supply aggregate reinsurance to the Citizens Personal Lines Account, which just includes personal property multi-peril policies, we comprehend.
The Series 2023-2 Class A notes will cover Citizens for losses from an accessory point of $6.486 billion, tiring at $9.491 billion, providing a preliminary accessory point of 1.23%, a preliminary base anticipated loss of 0.92% and these notes are being used with rate assistance in a variety from 89.5% to 90% of the initial principal (a rough 10% to 10.5% comparable to a rate-on-line or voucher).
It’s good to see Florida Citizens aiming to build on its disaster bond protection for this last wind season where it has these several accounts in location.
In 2024, Citizens reinsurance purchasing might show a less complex affair, with a single reinsurance tower into which it can place multi-year cat bonds to diversify its protection throughout its losses more just.
However, any financiers or reinsurers that prevented particular Accounts in the past, will no longer have that alternative, with Florida Citizens called storm losses being ground-up throughout all the property direct exposures in its portfolio from next year.
You can check out everything about these brand-new Everglades Re II Ltd. (Series 2023-1 & 2023-2) disaster bonds being sponsored by Florida’s Citizens Property Insurance Corporation and view information of more than 900 other cat bond issuances in the comprehensive Artemis Deal Directory.
