Brit Limited, the specialty insurance and reinsurance player and part of the Fairfax group, is now aiming to secure its new catastrophe bond coverage at reduced pricing, as the still $100 million Lapis Series 2025-1 industry-loss triggered multi-peril deal has seen its price guidance lowered, Artemis has learned.
Brit returned to the catastrophe bond market for the first time since 2020 earlier this month, targeting $100 million or more in multi-peril North American catastrophe reinsurance protection from this Lapis 2025-1 cat bond arrangement.
Brit last sponsored a catastrophe bond back in 2020, when it secured $300 million of multi-peril collateralized U.S. catastrophe retrocessional reinsurance from the capital markets using its own UK domiciled protected cell company, Sussex Capital UK PCC Limited as the issuer.
Brit is again utilising a UK domiciled special purpose reinsurance vehicle for its new cat bond issuance, the Lloyd’s insurance-linked securities (ILS) structure London Bridge 2 PCC Limited.
We’re told that the offering size remains unchanged, with London Bridge 2 PCC still set to issue $100 million of Lapis 2025-1 notes to cat bond investors.
But we understand from sources that the price guidance for the notes has fallen, as Brit looks to capitalise on the attractive execution being seen in the cat bond market, especially for industry-loss based deals which remain in high-demand.
To recap, the $100 million Lapis Series 2025-1 cat bond notes on offer will provide Brit Re and Brit’s Syndicate 2987 ceding entities with weighted industry-loss trigger based annual aggregate catastrophe reinsurance protection covering US named storms including DC, Puerto Rico and the US Virgin Islands, as well as earthquakes in the US, those same additional territories and Canada from April 1st through until the end of 2028, so providing four hurricane seasons of coverage and three years eight months of earthquake protection.
The Lapis Series 2025-1 cat bond notes that London Bridge 2 PCC will issue come with an initial expected loss of 3.58% and were initially offered to investors with spread price guidance in a range from 7.75% to 8.5%.
Now, we’re told that price guidance has fallen, with the notes being offered with an updated range of 7.5% to 7.75%.
So Brit appears to be prioritising price over growing the amount of retrocessional reinsurance coverage this new cat bond will provide the company, with a spread at the bottom of the initial range or lower now targeted.
The firm’s Sussex Capital UK PCC Limited (Series 2020-1) cat bond had been $300 million in size and matured in late 2024. Prior to that, Brit’s only other entry in our Deal Directory was the Fremantle Ltd. securitized catastrophe swap transaction right back in 2007.
You can read all about this London Bridge 2 PCC Limited (Lapis 2025-1) catastrophe bond transaction in our Deal Directory, where you can analyse details of almost every cat bond ever issued.
