Louisiana Citizens lifts upper target for Bayou Re cat bond to $275m

Louisiana Citizens Property Insurance Corporation, the non-profit insurer of last resort for residential and commercial property policies in the state, has raised its upper target for its new catastrophe bond to as much as $275 million of collateralized named storm reinsurance from the Bayou Re Ltd. (Series 2024-1) issuance.

This will be the tenth catastrophe bond sponsored by Louisiana Citizens we now have listed in our Deal Directory.

It’s the second catastrophe bond under the Bayou Re Ltd. special purpose insurer (SPI) based in Bermuda.

Louisiana Citizens launched this new Bayou Re 2024-1 cat bond to investors back at the beginning of April, with an initial target to secure $225 million of Louisiana named storm reinsurance protection.

Now, we’re told the target size of this issuance has increased, with up to $275 million of reinsurance now being sought.

At the same time, sources have said that the price guidance for each of the tranches of Series 2024-1 cat bond notes set to be issued by Bayou Re Ltd. has been lowered, with new spread guidance being offered at levels below the initial ranges.

The Bayou Re 2024-1 cat bond notes will protect Louisiana Citizens against named storm losses on an indemnity trigger and per-occurrence basis, across a three-year term.

What was a $150 million Class A tranche of notes are now sized at between $150 million and as much as $200 million, we are told.

The Class A notes have an initial expected loss of 1.14% and were initially offered to investors with spread price guidance of 9.5% to 10.5%, but that has now fallen to a new range of 8.5% to 9.5%.

The Class B tranche of notes remain at $75 million in size and are riskier, having an initial expected loss of 3.19%.

The Class B notes launched with spread price guidance in a range from 19% to 20%, but that has also been reduced to a new range of 18.5% to 19%.

So it appears that Louisiana Citizens will benefit from strong execution for its latest catastrophe bond deal, making the most of market conditions to both upsize the reinsurance coverage from it and secure that coverage at a lower than initially expected price.

You can read all about this new Bayou Re Ltd. (Series 2024-1) catastrophe bond and every other cat bond issued in the extensive Artemis Deal Directory.