Security First Insurance Company, the Florida domestic homeowners insurer, has again seen the guidance pricing drop for its new First Coast Re IV Ltd. (Series 2023-1) catastrophe bond issuance, with now a ~12% saving targeted through a reduced spread.
With investor appetites high and capital levels at cat bond fund managers rising in many cases, the market has been able to offer increasingly strong execution on price, resulting in favourable placements for many sponsors.
Security First Insurance aims to follow suit, with this second price drop for its new cat bond issuance.
The insurer now continues to target $100 million of collateralized reinsurance protection, to cover Florida named storm and severe thunderstorm risks, on an indemnity trigger, per-occurrence and cascading basis, through a Series 2023-1 Class A tranche of notes issued by Bermuda-based notes issued by First Coast Re IV Ltd.
There’s been no change to the size target, with the sponsor seemingly more focused on price execution at this time.
The $100 million of Series 2023-1 Class A notes that First Coast Re IV aims to issue come with an initial base expected loss of 1.25% and were a first marketed to cat bond funds and investors with spread guidance in a range from 10% to 11%.
As we later reported, the price guidance was lowered, with the notes offered to pay a spread of between 9.5% and 10%.
Now, sources tell us the pricing has declined further, with a range of 9% to 9.5% now offered, indicating that this become the latest cat bond to price below the initial spread guidance range.
At the mid-point of that revised guidance, this would be a roughly 12% drop in spread, while should it price at the bottom-end then the price drop would be over 14%.
The multiple-at-market will still be much higher than previous issuances by this sponsor, indicating the still hard reinsurance market, but the fact this is another Florida risk to price down shows a continued moderation of the pricing peak in the cat bond market and could bode well for sponsor demand as we run up to the mid-year renewals.