American Coastal secures upsized $200m Armor Re II 2024-2 cat bond – Artemis.bm
American Coastal Insurance Company (AmCoastal) has successfully priced its latest catastrophe bond, securing the Armor Re II Ltd. (Series 2024-2) issuance at an upsized target of $200 million, with the spread finalized below initial guidance.
AmCoastal returned to the cat bond market with its new Armor Re II 2024-2 deal in November, initially aiming for a target of $100 million in reinsurance. However, the company quickly increased its target size to seek between $100 million and $150 million of reinsurance. Eventually, the target was raised again to between $150 million and $200 million.
Recent confirmations indicate that AmCoastal has achieved the upper-end target of $200 million, with the Armor Re II 2024-2 cat bond now set to provide the company with $200 million of reinsurance from the capital markets.
The Series 2024-2 Class A cat bond notes to be issued by Armor Re II will provide AmCoastal with over three years of fully-collateralized Florida named storm reinsurance protection, running until the end of December 2027. This coverage operates on an indemnity trigger and per-occurrence basis throughout the risk period.
The $200 million of Series 2024-2 Class A notes have an initial expected loss of 0.59%. These notes were initially presented to cat bond investors with spread price guidance set in a range of 9% to 10%. The pricing guidance was subsequently lowered, first to the bottom end of the range at 9%, and then revised to a lower band of 8.5% to 9% in the following updates.
Ultimately, when finalizing the pricing for the $200 million protection, the spread was established at 8.5%, which reflects the lower end of the revised guidance. This represents a decline of approximately 11% in pricing as the cat bond was marketed.
This execution for AmCoastal, being a rare Florida wind-only catastrophe bond during this time of year, sends a compelling signal to other participants in the Florida insurance market. It suggests that the catastrophe bond market is currently offering ample capacity and attractive pricing. This may encourage more insurers to explore the market earlier than usual for the 2025 cycle.
This new Armor Re II Ltd. (Series 2024-2) catastrophe bond transaction is part of an evolving landscape in the cat bond market, showcasing opportunities for insurance companies to secure crucial reinsurance coverage.
