The Massachusetts Property Insurance Underwriting Association (MPIUA) has now successfully secured its targeted $150 million of multi-peril aggregate reinsurance protection through the Mayflower Re Ltd. (Series 2026-1) catastrophe bond, with both tranches of notes pricing below their initial guidance ranges, sources have told Artemis.
In our first update on the deal we reported that while the target size for this new Mayflower Re 2026-1 catastrophe bond remained unchanged at $150 million, the MPIUA was looking to capitalise on strong price execution in the cat bond market, with the price guidance lowered for both of the tranches of notes on offer.
In a second update we then reported that the price guidance had been lowered a second time, as the MPIUA targeted even more attractive price execution for its latest cat bond sponsorship.
Now, we’ve learned from sources that both tranches of notes priced below the initial guidance, securing the targeted $150 million of aggregate multi-peril reinsurance at attractive rates for the sponsor.
Currently, residual market insurer the MPIUA has $575 million in cat bond backed reinsurance protection outstanding, according to our cat bond sponsor leaderboard.
But with $250 million of that coming from a 2023 cat bond that is scheduled to mature in early July, it’s now confirmed that the insurer will drop to $475 million of cat bond protection outstanding this year. Which is perhaps a little surprising, given the MPIUA has grown its insured value exposure over the last year.
You can read about all of the MPIUA’s catastrophe bonds in our extensive Deal Directory.
Mayflower Re Ltd. will now issue and sell to investors two tranches of Series 2026-1 notes, each equally sized to provide the MPIUA with $75 million of protection across different layers of its reinsurance tower.
The cat bond will provide the MPIUA with a multi-year source of indemnity based and annual aggregate reinsurance covering losses from Massachusetts named storms, severe thunderstorms and winter storms, running across a three-year term and three annual risk periods until the end of June 2029, with a $10 million ultimate net loss deductible in place.
The $75 million Series 2026-1 Class A tranche of notes come with an initial base expected loss of 1.788%. They were first offered to investors with price guidance of 4% to 4.5%, which fell to 3.5% to 4% at the first update, then again to between 3% and 3.5%. We’re now told the Class A notes priced to pay investors a spread of 3%, so the low-end of reduced guidance.
The $75 million Series 2026-1 Class B tranche of notes are riskier, coming with an initial base expected loss of 2.598%. They were initially marketed to investors with price guidance of 4.75% to 5.25%, which fell to 4.25% to 4.75% at the first update, then fell again to a range of 3.75% to 4.25%. We’re now told the Class B notes have been priced to pay investors a spread of 4%, so below the initial guidance but within the revised for a second time range.
Last year’s single tranche of Mayflower Re 2025-1 cat bond notes came with an initial expected loss of 0.901% and priced to pay investors 3.5%, for a spread multiple-at-market of almost 3.89 times expected loss.
With this 2026-1 cat bond, the Class A notes come with a multiple-at-market of just 1.68 times EL and the Class B notes 1.54 times EL, so meaningfully lower for the sponsor this time around which indicates attractively priced reinsurance for the MPIUA from its latest catastrophe bond.
You can read all about this new Mayflower Re Ltd. (Series 2026-1) catastrophe bond and every other cat bond transaction issued since the market began in the Artemis Deal Directory.
