Arch targets lower pricing for new Ramble Re industry-loss cat bond

Arch Capital Group, the Bermuda headquartered specialty insurance and reinsurance company, is now targeting reduced pricing for its latest catastrophe bond, with the spread guidance offered for the still $100 million of Ramble Re Ltd. (Series 2024-1) cat bond notes now lowered.

Arch returned to the catastrophe bond market earlier this month with this first Ramble Re cat bond, looking to secure additional capital market backed property catastrophe retrocession for its Arch Re underwriting entity.

Using a newly established Bermuda based company Ramble Re Ltd., the issuance sees a single tranche of Series 2024-1 Class A notes offered to investors, to source collateral for a retro reinsurance agreement between it and Arch Re.

We’re told that the target size for the issuance has not changed yet, with still $100 million of retro targeted from this transaction.

That retrocession from the first Ramble Re catastrophe bond will provide Arch Re with retrocession on a weighted industry loss trigger and per-occurrence basis, across a three-year term.

Arch Re will benefit from additional retrocessional protection against significant US Northeast named storm and US and Canada earthquake industry loss events with this new cat bond deal.

The still targeted at $100 million in Series 2024-1 Class A notes that Ramble Re Ltd. will issue come with an initial expected loss of 3.19% and were initially offered with spread guidance in a range from 6.75% to 7.5%.

We are now told by sources that the spread guidance for the Class A notes from Ramble Re has been lowered, with a revised range of between 6% and 6.75% on offer.

Which suggests this new cat bond for Arch Re will settle to provide investors a low multiple-at-market, which is aligned with other industry-loss trigger cat bonds seen so far this year.

As we’ve reported before, there has been capital inflow to the market with a specific index trigger focus, according to sources, which has helped some sponsors in securing very attractively priced cat bond retro coverage in recent months.

On the flip-side to that, we’ve spoken with investment managers for who the low-pricing of some industry-loss cat bonds has now made them less appealing.

Arch is clearly set to capitalise on this trend, of index cat bonds pricing with lower multiples-at-market than indemnity deals.

You can read all about this Ramble Re Ltd. (Series 2024-1) cat bond sponsored by Arch and every other catastrophe bond deal in our Artemis Deal Directory.