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Three cat bonds upsize and price at low end of range

Three cat bond issues closed last week, surpassing their target sizes by 21-42 percent and pricing at the lower end of initial guidance.

MS&AD Insurance Group's Akibare Re 2018-1 typhoon cat bond settled at $320mn (£224mn), an increase of 42 percent from its initial $225mn target size. Both tranches of the Japanese cat bond settled at 190 basis points (bps), after each launched with a guidance range of 200-250 bps.

This translates into a 16 percent decrease, using the mid-point of the initial range.

The class A tranche increased by 47 percent, rising to $220mn from an initial target of $150mn.

The notes will provide Mitsui Sumitomo Insurance with cover against typhoon, flood events and earthquake fire events.

The class B notes expanded to $100mn, from an initial target of $75mn.

These notes will provide Aioi Nissay Dowa Insurance with cover against typhoon and flood events.

Allstate's Sanders Re 2018-1 cat bond expanded by 25 percent to $500mn, as pricing dropped to 550 bps, the lower boundary of the initial guidance range.

The multi-peril cat bond was initially being marketed at 550-625 bps.

The indemnity trigger transaction will cover named storms, earthquakes, severe weather and other perils.

The four-year cat bond uses a new trigger for Allstate as it can provide either occurrence or annual aggregate cover.

It will fill in part of a $500mn excess $4bn reinsurance layer if used as per-event cover, while the aggregate layer is set at $500mn in excess of $3.75bn with a franchise deductible of $1mn.

Floridian insurer Safepoint's Manatee Re 2018-1 cat bond settled at $200mn, an increase of 21 percent from the initial target size of $165mn.

Pricing for both tranches of the three-year deal - which is the first Floridian cat bond of 2018 - fell to the lowest end of the initial guidance.

The increase came from the 2018-1 class A notes, which expanded by 28 percent in the course of marketing, to reach $160mn up from $125mn.

Meanwhile, the $40mn 2018-1 class B notes remained unchanged in size at $40mn.

The class A notes will pay investors 425 bps, 5.6 percent below the midpoint of the initial 425 to 475 bps spread guidance.

The riskier $40mn 2018-1 class B notes will pay investors 775 bps, 4.6 percent below the midpoint of the initial 775 to 850 bps range.

The transaction covers named storms and severe thunderstorms in an initial covered area of Florida, Louisiana and Texas for a three-year period using an indemnity, cascading per-occurrence trigger.

In a first loss scenario, the notes would attach above Safepoint's Florida Hurricane Catastrophe Fund cover, but can cascade down to as low as $45mn to replace eroded cover for subsequent events.

Safepoint was one of a couple of Floridian insurers that made recoveries from cat bond investors after Hurricane Irma last year.

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