AmFam secures Four Lakes Re catastrophe bond at upsized $175m
American Family Mutual Insurance Company, or AmFam as it is known, has now secured the upsized $175 million in capital market backed multi-peril catastrophe reinsurance from its new Four Lakes Re Ltd. (Series 2023-1) catastrophe bond.
American Family (AmFam) returned to the catastrophe bond market in November, targeting $150 million in reinsurance protection from what is the insurers’ sixth visit to the catastrophe bond market.
The company has sponsored a catastrophe bond under the Four Lakes Re program of deals every year since 2020, becoming a consistent user of capital markets capacity for some of its reinsurance arrangements.
As we reported last week, AmFam’s target for its latest cat bond had been increased by $25 million, while at the same time the pricing looked set to finalised towards the upper-ends of guidance for both of the tranches of cat bond notes on offer.
Now, Artemis can report that AmFam has successfully upsized this Four Lakes Re 2023-1 catastrophe bond, to secure the upsized target for $175 million of reinsurance from the deal.
As a result, this Four Lakes Re 2023-1 cat bond will provide AmFam with $175 million of multi-peril US catastrophe reinsurance protection, against losses from US named storms, earthquakes, severe thunderstorms, winter storms and wildfires, on a per-occurrence and indemnity trigger basis, across a three calendar year term, from January 2024 to the end of December 2026.
Having succeeded in upsizing the cat bond issuance, this new Four Lakes Re 2023-1 cat bond will replace the $175 million Four Lakes Re Ltd. (Series 2020-1) that matures at the end of this year, although sitting a little differently within the AmFam reinsurance tower.
What was a $100 million Class A tranche of notes were successfully upsized to $125 million, we now understand.
The Class A notes, with their initial expected loss of 0.63%, were first offered with spread price guidance in a range from 5% to 5.75%, which was later fixed at the upper-end of 5.75% and that is where we’re told the notes have now been priced.
The Class B tranche of notes remained at $50 million in size.
The Class B notes are the riskier layer, with their initial expected loss set at 2.44%. They were first offered to investors with spread price guidance in a range from 9% to 9.75%, which was later fixed at 9.5% and that is where we’re now told the Class B notes were priced.
It’s good to see AmFam successfully replacing its maturing reinsurance coverage from the catastrophe bond market and also to see it upsizing the deal slightly despite pricing moving above the initial guidance mid-point in each case.
You can read all about this new Four Lakes Re Ltd. (Series 2023-1) catastrophe bond from American Family in the Artemis Deal Directory.
