American Coastal seeks $150m Armor Re II Florida named storm cat bond

American Coastal Insurance Company, which is the main entity of what was the United Insurance Holdings group, is back in the catastrophe bond market for the first time in a few years, seeking $150 million or more in Florida named storm reinsurance protection from this Armor Re II Ltd. (Series 2024-1) transaction, Artemis has learned.

American Coastal Insurance was last slated to be a beneficiary of a cat bond back in March 2020, but that Armor Re II 2020-1 issuance failed to receive the required support in the market and as a result the book failed to build sufficiently in the early stages, which given what happened in the world at that time was no real surprise.

Prior to that, United Insurance Holdings sponsored a $100 million Armor Re II 2019-1, where American Coastal was one of the ceding companies.

Now, with the United group and its insurer UPC no more (UPC itself is being run-off), American Coastal Insurance which writes condominium and homeowners association business and partners with MGA AmRisc, is back to secure $150 million or more in reinsurance from the capital markets for itself.

The Bermuda based Armor Re II Ltd. special purpose insurer will seek to issue a single tranche of Series 2024-1 Class A notes, to be sold to investors and the proceeds used to collateralize a reinsurance agreement with American Coastal Insurance Company.

The Armor Re II 2024-1 notes will provide American Coastal with a three-year source of Florida named storm reinsurance protection, running to the end of April 2027, we understand.

The notes are structured to protect American Coastal on an indemnity and per-occurrence basis over that risk period.

$150 million of Class notes are said to be on offer, with their coverage set to attach at $275 million and exhaust at $575 million, meaning there would be plenty of room for this new cat bond to upsize for American Coastal, should the cat bond investor market be receptive to it.

The $150 million of Class A notes that Armor Re II Ltd. will issue come with an initial attachment probability of 1.38%, an initial expected loss of 0.89% and are being offered to cat bond investors with spread price guidance in a range from 10% to 11%, we are told.

This is just the latest example of a US domiciled insurer getting out early to secure named storm reinsurance well in advance of the more typical mid-year renewal season.

With catastrophe bond market conditions proving conducive to sponsors, it will be interesting to see how far the investor base will go on price at this time, with our sources suggesting that a floor must be found soon or some investors may begin to lose appetite for newer deals, especially given the reduced spreads we’ve seen recent issues executing at.

It’s also worth noting our report from January on American Coastal’s saying that it experienced a risk adjusted price decrease of 9.24% in renewing its all other perils reinsurance arrangement for 2024.

You can read all about this new Armor Re II Ltd. (Series 2024-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.