American Coastal Insurance Company (AmCoastal Insurance) has now successfully priced its latest catastrophe bond, securing the targeted $200 million multi-peril reinsurance from the capital markets from its Armor Re II Ltd. (Series 2026-1) issuance, this publication has learned.
American Coastal Insurance Company returned to the catastrophe bond market in late March, targeting a $200 million source of multi-peril reinsurance protection from the capital markets.
In our first update on this deal, we reported that AmCoastal Insurance’s $200 million target remained the same, but like most cat bond sponsors, the company was aiming to adjust the pricing of the risk interest spread it will pay for the coverage, with one tranche lowered and the other narrowed around the middle of initial guidance.
Now priced, the confirmed $200 million Armor Re II 2026-1 cat bond will provide American Coastal with a just over three-year source of Florida focused reinsurance protection, for losses from the perils of named storm, earthquake fire following, severe weather and fire.
The term of coverage for this cat bond will run from June 1st this year until the end of May 2029, with maturity due early the following month, making this is a three-year deal.
These cat bond notes will protect AmCoastal with Florida multi-peril reinsurance coverage for the losses from the perils named above on an indemnity trigger and per-occurrence basis over that risk period.
The $100 million tranche of Class A notes that Armor Re II will now issue will attach their coverage at $50 million of losses to AmCoastal Insurance and exhaust at $250 million, giving them an initial attachment probability of 0.51%, and an initial expected loss of 0.44%.
The notes were offered to cat bond investors with spread price guidance in a range from 5.5% to 6.25%, which was then lowered to a revised range of 5% to 5.5%. We’re now told the Class A notes priced to pay investors an initial risk interest spread of 5%, so the bottom end of reduced guidance.
The riskier $100 million tranche of Class B notes will attach their reinsurance coverage at $225 million of losses and exhaust at $425 million, which gives them an initial attachment probability of 6.42%, and an initial expected loss of 4.22%.
Initially, these notes were offered to cat bond investors with spread price guidance in a range from 14.5% to 15.5%, which was then revised around the middle of the initial range to 14.75% to 15.25%. We’re now told the Class B notes priced to pay investors an initial risk interest spread of 14.75%, so within the lower half of initial guidance.
As we explained, AmCoastal Insurance appears to have prioritised price over size with its latest catastrophe bond, securing its targeted reinsurance coverage at better than initially targeted pricing.
As a reminder, you can read all about this new Armor Re II Ltd. (Series 2026-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.
