The Travelers Companies, the US property & casualty insurance giant, is back in the catastrophe bond market initially targeting $500 million of multi-peril reinsurance protection covering losses in northeast states from a Long Point Re IV Ltd. (Series 2026-1) issuance, Artemis has learned.
The most recent was its $575 million Long Point Re IV Ltd. (Series 2022-1) sponsored roughly four years ago, but the reinsurance that cat bond provides is set to mature at the start of June.
So it’s encouraging to learn that Travelers is back in the cat bond market, looking for a renewal of sorts of that northeast focused multi-peril catastrophe reinsurance from the capital markets.
Read about all of Travelers catastrophe bonds in our extensive Deal Directory.
We understand the transaction covers the same range of catastrophic perils and the same northeast US states as its soon to mature 2022-1 cat bond issuance, while the new 2026-1 cat bond notes will sit at a similar level in the insurer’s reinsurance tower as where its prior cat bond issuance was last reset to attach.
Long Point Re IV Ltd. is offering to investors a single $500 million tranche of Series 2026-1 Class A notes, with the proceeds from their sale set to be used to collateralize a reinsurance agreement between the SPI and Travelers.
We understand the catastrophe reinsurance coverage will protect a range of Travelers subsidiaries against losses from the same perils as its 2022 cat bond, so U.S. tropical cyclone, earthquake, severe thunderstorm, and winter storm events, across Northeastern U.S. states only.
The covered area is the same states of Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and Vermont, sources said.
Similar to the last cat bond as well, we’re told this new Series 2026-1 cat bond will provide reinsurance protection to Travelers and subsidiaries that include the usual insurance companies, Travelers Indemnity, Travelers Casualty & Surety, St. Paul Fire and Marine and The Standard Fire Insurance Company, as well as any associated subsidiaries of each.
The Long Point Re IV 2026-1 cat bond notes will provide Travelers with this multi-peril northeast US reinsurance on an indemnity trigger and per-occurrence basis across a four year term, with maturity expected to be in early June 2030, we’re told.
Long Point Re IV is targeting issuance of at least $500 million of Class A notes, we understand, so it will at least partially replace the soon to mature 2022 cat bond, while a full-replacement could be on the cards if market conditions are deemed conducive by the sponsor.
The currently $500 million of Class A notes would attach at $2.85 billion of losses and exhaust coverage at $3.85 billion, giving them an initial attachment probability of 1.68%, and initial base expected loss of 1.38%.
We understand that the notes are being offered to cat bond investors with price guidance in a range from 4% to 4.75%.
For comparison, the Series 2022-1 cat bond issuance came with an initial expected loss of 1.127% and priced to pay investors a spread of 4.25%.
It’s good to see Travelers returning and looking to renew some or all of its expiring catastrophe bond backed reinsurance protection and it will be interesting to see if the company looks to upsize the issuance to lock-in more, given the currently attractive insurance-linked securities market conditions.
You can read all about Travelers new Long Point Re IV Ltd. (Series 2026-1) multi-peril catastrophe bond and every other transaction in the Artemis Deal Directory.
