NJM Insurance has set its sights on sponsoring its largest catastrophe bond so far, with all tranches of notes now having target sizes that overall seek to secure $250 million of northeast US named storm reinsurance from the capital markets from its new Lower Ferry Re Ltd. (Series 2026-1) issuance, Artemis can report.
Across this Lower Ferry Re Ltd. Series 2026-1 cat bond sponsorship, three tranches of notes were offered but at first only two were sized, giving an initial target from NJM Insurance of securing $150 million or more in reinsurance protection.
Now, we’re told that the unsized tranche has been sized and the other two offered have increased slightly, taking the total target for northeast US named storm reinsurance limit to $250 million with this deal.
At the same time, like most cat bonds of late, the price guidance has been lowered for all three tranches of Series 2026-1 notes that Lower Ferry Re is offering, we understand.
NJM Insurance is the more commonly used brand name for New Jersey Manufacturers Insurance Company, an American mutual insurance group of companies that offers its policyholders auto and property lines of coverage across a number of states in the northeast US.
Previously, the insurer has sponsored two cat bonds, a $60 million Sullivan Re Ltd. (Series 2013-1) transaction over a decade ago and more recently a $190 million Lower Ferry Re Ltd. (Series 2023-1) catastrophe bond.
The Lower Ferry Re 2023-1 cat bond is scheduled to mature this June, so it now appears that NJM Insurance is set to more than replace the reinsurance protection that expiring cat bond had provided it with.
The latest on this new offering is that Bermuda domiciled special purpose insurance vehicle Lower Ferry Re Ltd. is still offering three tranches of Series 2026-1 cat bond notes to investors.
With all three tranches now having target sizes attached to them, NJM Insurance is seeking a $250 million source of fully-collateralized US named storm reinsurance protection covering Northeast US states, with the protection structured on an indemnity and per-occurrence basis and set to run for a roughly three-year term.
The Class A tranche of notes that will sit highest up in the sponsors reinsurance tower were initially unsized, but we now understand target $70 million of limit for NJM Insurance.
The Class A notes are the least risky, coming with a base expected loss of 1.18%. They were first offered to investors with price guidance indicating a spread of between 3% and 3.5%, but that guidance has now fallen to a tighter range of 2.75% to 3%, sources said.
A Class B tranche of notes were initially $50 million in size but are now offered at a slightly upsized $55 million, we are told.
The Class B notes come with an initial base expected loss of 1.49% and were first offered with price guidance indicating a spread of between 3.25% and 3.75%. Now, the price guidance for this tranche has also fallen, to between 3% and 3.25%.
The final Class C tranche of notes were initially $100 million, but are now offered as a $125 million layer, we have learned.
The Class C notes come with an initial base expected loss of 2% and were first marketed with price guidance for a spread of between 4.25% and 4.75%. That again has fallen, to a revised price guidance range of 4% to 4.25%.
Which means NJM Insurance is targeting execution of its third catastrophe bond with risk interest spreads at or below the bottom-end of initial price guidance, while also looking to upsize on the reinsurance this Lower Ferry Re 2026-1 cat bond will provide.
You read all about this new Lower Ferry Re Ltd. (Series 2026-1) cat bond transaction and every other catastrophe bond in the Artemis Deal Directory.
