GeoVera seeks $100m quake cover with second Veraison Re catastrophe bond

GeoVera Insurance Holdings, Ltd., a specialty earthquake-focused residential property insurance company, is back in the catastrophe bond market for the second time, seeking $100 million or more in US earthquake reinsurance via a Veraison Re Ltd. (Series 2024-1) cat bond issuance.

Fast-growing catastrophe exposed property and quake focused primary writer GeoVera sponsored its debut catastrophe bond in late 2022, securing $150 million of collateralized US earthquake reinsurance with the Veraison Re 2023-1 cat bond.

That was a more challenging time to sponsor a cat bond, given the upheaval the market went through in later 2022 as uncertainty over potential losses from hurricane Ian persisted at that time, global macro market effects took their toll on investor appetites and fast-hardening reinsurance prices pushed spreads higher.

Now, cat bond market conditions are far more conducive for sponsors and GeoVera returns at a time when the market has been flying and cat bond fund managers have excess cash due to a string of maturities, which could make this an opportune time to secure much better execution than the debut December 2022 Veraison Re cat bond deal.

GeoVera is again using its Bermuda licensed special purpose insurer (SPI) Veraison Re Ltd. for this Series 2024-1 catastrophe bond issuance.

Veraison Re Ltd. is offering investors a single $100 million tranche of Series 2024-1 Class A notes, we understand, with those notes set to be exposed to losses from US earthquakes.

The reinsurance the notes will provide will cover GeoVera’s underwriting entities against losses from US earthquakes over a three year term running from March 1st, we’re told.

The reinsurance protection from this Veraison Re 2024-1 cat bond will be afforded on an indemnity trigger and per-occurrence basis.

Sources said that the $100 million of Class A notes would attach their reinsurance coverage for a US earthquake event that exceeded $700 million in losses to GeoVera, covering a percentage of losses up to an exhaustion point of $950 million.

The Veraison Re 2024-1 Class A cat bond notes will come with an initial attachment probability of 1.24%, an initial expected loss of 1% and are being offered to cat bond investors with spread guidance in a range from 5% to 5.5%, we understand.

Which reflects much lower pricing than the December 2022 Veraison Re 2023-1 cat bond, whose lower-risk and most comparable tranche of notes had an initial expected loss of 0.65% and priced to pay investors a spread of 6.5%

But, as we said earlier in this article, the cat bond market was in a very different state in late 2022, compared to today and as a result execution of this second Veraison Re catastrophe bond should certainly be more favourable for GeoVera this time around.

You can read all about this Veraison Re Ltd. (Series 2024-1) in the extensive Artemis Deal Directory that includes details on almost every cat bond ever issued.