Heritage seeks $100m named storm reinsurance with Citrus Re 2024-1 cat bond
Heritage Insurance Holdings, Inc., the nationally expansive and Florida headquartered property and casualty insurer, is back in the catastrophe bond market and seeking $100 million or more in collateralized US named storm reinsurance from a Citrus Re Ltd. (Series 2024-1) issuance.
Heritage Insurance Holdings is a long-standing catastrophe bond sponsor, having tapped the capital markets for reinsurance in cat bond form since right back in 2014, when its first Citrus Re cat bond was issued.
This new Citrus Re 2024-1 catastrophe bond will be the ninth issuance under the Citrus name that Heritage has sponsored and we have listed in our extensive cat bond Deal Directory.
This new cat bond from Heritage sees the company seeking protection for its own book under cedent Heritage Property & Casualty Insurance Company, as well as that of subsidiary Narragansett Bay Insurance Company (NBIC), we understand.
Citrus Re Ltd., Heritage’s Bermuda based special purpose insurer (SPI), will seek to issue two tranches of notes, that will be sold to investors and the proceeds used to collateralize reinsurance agreements for the cedents benefit.
The Citrus Re Series 2024-1 cat bond notes are targeted to provide Heritage and its subsidiary with a multi-year source of southeast US named storm reinsurance protection, on an indemnity trigger and per-occurrence basis, across a three-year term from June 1st 2024 to June 2027, we are told.
The named storm and hurricane reinsurance protection will initially be for the US states of Alabama, Florida, Georgia, Mississippi, North Carolina and South Carolina, but the coverage area can be expanded to also include Maryland and Virginia at a future update, it is said.
A currently $50 million tranche of Class A notes would attach at $700 million of losses and exhaust their reinsurance coverage at $800 million, giving them an initial attachment probability of 1.38%, an initial expected loss of 1.29% and these notes are being offered to investors with spread guidance in a range from 9% to 9.75%, sources said.
A similarly $50 million Class B tranche of notes are riskier, with an attachment point at $560 million of losses and exhaust their reinsurance coverage at $700 million, so sitting beneath the Class A notes, which gives them an initial attachment probability of 1.64%, an initial expected loss of 1.5% and these notes are being offered to investors with spread guidance in a range from 10% to 10.75%, we understand.
We are told these notes will sit at the top of Heritage’s southeast US reinsurance tower and there is room for each class of notes to grow, given they would currently only occupy a share of each layer at $50 million in size.
This is now the third year in succession that Heritage has looked to tap the catastrophe bond market for reinsurance coverage, layering multi-year named storm protection from the capital markets into its arrangements.
You can read all about this Citrus Re Ltd. (Series 2024-1) catastrophe bond and every other cat bond issued in our extensive Artemis Deal Directory.
