NCIUA looks to grow Cape Lookout Re 2024-1 cat bond 80% to $450m

The North Carolina Insurance Underwriting Association (NCIUA) is looking to significantly upsize its latest catastrophe bond transaction, with now $450 million of named storm reinsurance sought from the Cape Lookout Re Ltd. (Series 2024-1) issuance, Artemis has learned.

That’s an 80% increase from the $250 million of reinsurance that was originally being targeted, when, as we reported, the NCIUA came back to the cat bond market last month.

At the same time as looking to grow its latest cat bond issuance, the NCIUA is also targeting pricing below the initial mid-point, with the spread guidance now lowered and narrowed towards the bottom of the original range, we are told.

Cape Lookout Re Ltd., the NCIUA’s Bermuda special purpose insurer, is now aiming to issue a single, $450 million, tranche of Series 2024-1 Class A notes. So 80% larger than the original targeted $250 million.

The now $450 million in notes will provide the NCIUA with a source of indemnity and annual aggregate reinsurance protection against named storm losses, covering the insurer across a three year term, with qualifying losses needing to drive a $25 million or greater impact to the insurer of last resort to count towards the aggregated total.

The Cape Lookout Re Series 2024-1 Class A cat bond notes come with an initial expected loss of 2.56% and were first offered with spread price guidance in a range from 8% to 9%, but we are not told that the range has dropped and been narrowed to 8% to 8.25%, so the NCIUA is aiming to price its latest cat bond at or near the bottom of initial guidance.

With the capital markets appetite for reinsurance risk in cat bond form at or near a high, the NCIUA is set to take advantage of this to grow the cat bond contribution to its reinsurance tower this year.

You can read all about this new Cape Lookout Re Ltd. (Series 2024-1) transaction and every other cat bond ever issued in our Artemis Deal Directory.