US main property and casualty insurer The Hartford is again within the disaster bond marketplace for the primary time since 2011, looking for a brand new $200 million supply of multi-peril disaster reinsurance via sponsorship of a Foundation Re IV Ltd. (Series 2023-1) cat bond issuance.
Now, the corporate has returned to the disaster bond market seeking fully-collateralized peak peril disaster reinsurance safety on a multi-year foundation, from the capital markets.
It’s yet one more encouraging sign for the cat bond market, that main insurers are returning in 2023 because the market affords efficient value execution for his or her reinsurance wants.
For its first disaster bond issuance in over a decade, The Hartford has established a Bermuda-based issuer named Foundation Re IV Ltd.
Foundation Re IV Ltd. will problem a single tranche of Series 2023-1 Class A disaster bond notes that will likely be bought to buyers and the proceeds used to collateralize a reinsurance settlement between the issuer and ceding firm, with the beneficiaries being Hartford Fire Insurance Co. and subsidiaries, we perceive.
Targeting $200 million with this issuance, the Hartford is looking for collateralized US named storm and earthquake safety, throughout a 3 calendar yr time period working the the tip of 2026.
The safety will likely be on an indemnity set off and per-occurrence foundation, we’re instructed, which is a change from its older Foundation Re cat bonds, that had all supplied trade loss based mostly safety to the Hartford.
Sources stated the notes would connect their protection at an attachment of $1.1 billion of losses and canopy a share as much as $1.4 billion,suggesting there’s some room for this new cat bond from the Hartford to upsize.
The $200 million of Series 2023-1 Class A notes being issued by Foundation Re IV Ltd. will include an preliminary attachment chance of 1.67%, an preliminary anticipated lack of 1.36% and are being supplied to cat bond buyers with unfold value steering in a spread from 6% to six.75%, we’re instructed.
It’s very encouraging to see a serious US insurance coverage participant reminiscent of The Hartford coming again to the disaster bond market after such a very long time away from it.
Given the maturity of the corporate and its reinsurance shopping for methods, it’s clear that The Hartford finds the cat bond market extra enticing this yr, which may very well be a pricing sign, or just a sign of rising demand for higher-layer, tail-risk sort protection.
You can learn all about this new Foundation Re IV Ltd. (Series 2023-1) cat bond transaction in our Deal Directory, the place you’ll be able to analyse particulars of almost each disaster bond ever issued.
