Flood Re, the state-backed flood reinsurance pool in the UK, has elevated the goal measurement for its debut disaster bond, with now UK £140 million in fully-collateralized flood retrocessional reinsurance sought from the London Bridge 2 PCC Limited (Vision 2039 – 2025-1) transaction.
Flood Re entered the market a couple of weeks in the past, with a plan to make use of the Lloyd’s insurance-linked securities (ILS) transformer construction London Bridge 2 PCC Restricted to sponsor its first ever disaster bond.
Initially, the target size for the deal was to secure UK £100 million (approx. $130m) in UK flood reinsurance from the capital markets with this Imaginative and prescient 2039 deal.
However now, sources have advised us, the goal measurement for the issuance has been elevated by 40%, with now UK £140 million (approx. $180m) in multi-year safety sought by Flood Re.
On the identical time, we’re advised that the worth steerage has been up to date to a now narrower vary, however in direction of the upper-end of the preliminary steerage.
As a reminder, this would be the first ever indemnity disaster bond to guard towards flood losses within the UK on an indemnity set off foundation.
London Bridge 2 PCC Restricted will subject a single, now focused at UK £140 million, tranche of notes through a protected cell named Imaginative and prescient 2039 (Collection 2025-1), to offer Flood Re with three years of retrocessional UK flood reinsurance to the tip of March 2028, on an indemnity set off and annual mixture foundation.
UK flood losses can be coated throughout the nations of England, Wales, Scotland and Northern Eire solely.
The now UK £140 million of Imaginative and prescient 2039 cat bond notes which are being supplied would connect their protection above £800 million of mixture flood losses to Flood Re and exhaust at £1.4 billion.
The notes have an preliminary anticipated lack of 1.7% and had been initially supplied to cat bond buyers with worth steerage in a variety from 5% to five.75%.
We’re now advised that the worth steerage has been up to date, to a brand new vary of 5.5% to five.75%, so in direction of the upper-end however nonetheless inside the preliminary steerage vary.
It’s notably encouraging to see Flood Re trying to develop on its ambitions for its first disaster bond, given this might open up a probably vital new sources of environment friendly retrocessional reinsurance danger switch for the UK’s flood danger wants.
You may learn all about this London Bridge 2 PCC Limited (Vision 2039 – 2025-1) disaster bond transaction in our Deal Listing, the place you’ll be able to analyse particulars of virtually each cat bond ever issued.
