The North Carolina Farm Bureau has now secured and priced its debut Blue Ridge Re Ltd. (series 2023-1) the issuance of catastrophe bonds at the target size increased by $400 million, while the price of the bonds was assessed within the initial forecast range.
This is a good result for a first-time sponsor and NC Farm Bureau brings the capital markets to its reinsurance tower for the first time in a securitized 144a catalytic bond format and at a raised size of $400 million. dollars, on a certain scale too.
This catastrophe bond from Blue Ridge Re will now provide the nonprofit agricultural organization and insurer with a source of multi-year reinsurance backed by capital markets against storm losses in its home state of North Carolina.
At launch, the NC Farm Bureau was seeking $250 million in storm reinsurance.on a compensation trigger basis and per event, over three full calendar years from January 1, 2024.
As we reported yesterday, the target size of this catalytic bond agreement has been updated to $400 million, representing a significant increase in the amount of reinsurance sought by the NC Farm Bureau.
Now, ticket prices have been set and spreads finalized in line with initial forecasts, while both tranches have remained at the $200 million raised level, from what we understand.
The low-risk tranche of the Series 2023-1 Class A Notes has an initial expected loss of 0.98% and was first offered with pricing guidance for a spread of 5% to 5.5%, which was later updated to a range of 5.25% to 5.5%. and we are now told that it has been finalized at the initial midpoint, to pay investors a spread of 5.25%.
The riskiest tranche of Class B notes has an initial expected loss of 1.91% and was initially offered with an indicative price ranging from 7.5% to 8%, which was later set at 8% and this is where ticket prices have now been set. again, this falls within the original guidelines, albeit on the high end.
It is good to see another first-time catastrophe bond sponsor maximizing its opportunity to obtain more than the targeted reinsurance with its first issuance and also securing this coverage within initial pricing expectations.
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