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The sixth transaction in the Acorn Re parametric earthquake catastrophe bonds from global reinsurance firm Hannover Re looks likely to increase in size and price down, with this Acorn Re Ltd. (Series 2025-1) transaction now targeted at between $225 million and $275 million in size, with lower spread guidance.
As we reported earlier this month, this Acorn Re 2025-1 catastrophe bond was launched with an initial target of $200 million.
But with market conditions conducive to upsizing and pricing down new catastrophe bond issuances, thanks to high-levels of investor demand, it seems this Acorn Re deal is likely to provide more reinsurance capacity to benefit its sponsors.
This sixth in the series of U.S. west-coast focused parametric earthquake catastrophe bonds, will reinsurance coverage to the Kaiser Permanente workers compensation captive, covering its insured exposure to earthquake risks across that region (largely centred on California), as well as to other Hannover Re reinsureds, that have exposure within the parametric earthquake boxes should a major quake event occur.
At its launch to investors, the Bermuda-based special purpose insurer (SPI) Acorn Re Ltd. was seeking to issue a single Class A tranche of notes, with the offering sized at $200 million.
Now, we’re told the offering size has been increased to between $225 million and $275 million.
As such, it looks like the Acorn Re 2025-1 Class A cat bond notes will provide the covered parties, Kaiser Permanente via the Oak Tree Assurance Ltd. workers compensation captive, and the other reinsureds of Hannover Re, with an enlarged multi-year source of per-occurrence parametric reinsurance protection against earthquakes that strike the U.S. west coast region.
The now up to $275 million tranche of Acorn Re 2025-1 Class A notes come with an initial expected loss of 0.96% and were first offered to cat bond investors with price guidance for a spread in a range from 2.5% to 2.9%.
We’re now told that spread price guidance has tumbled to an updated range of between 2% and 2.5%, a meaningful reduction for a lower-priced cat bond deal.
As a result of which, it looks like this new cat bond will continue the trend of tighter spreads, while its upsizing suggests ample capital available to support new issuance.
You read all about this new Acorn Re Ltd. (Series 2025-1) transaction and every other catastrophe bond in the Artemis Deal Directory.
Acorn Re parametric cat bond will upsize to as much as $275m while price drops was published by: www.Artemis.bm
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