Convex Group, the specialty insurance and reinsurance company, has raised the target size for its latest and third catastrophe bond sponsorship, with protection from the Hypatia Ltd. (Series 2025-1) cat bond issuance now expected to fall between $125 million and as much as $150 million, Artemis has learned.
Convex had returned to the catastrophe bond market earlier this month, initially aiming to secure $100 million of retrocessional protection from the capital markets.
Continuing the theme of very strong execution in the cat bond market, we understand that Convex looks set to be the latest sponsor to benefit and both upsize its new issuance while securing the coverage at reduced pricing, compared to initial guidance.
Convex first entered the catastrophe bond market back in 2020, securing $300 million of protection from its first Hypatia deal, before then returning in 2023 to secure $150 million of industry loss triggered retrocession with a Hypatia 2023-1 issuance.
That 2023 cat bond remains in-force, having its maturity scheduled for early April 2026, so this new Hypatia 2025-1 cat bond will extend and layer on additional retrocessional protection for the company.
This 2025 Hypatia cat bond issuance will provide protection for the peak North American perils of hurricane and earthquake risks, on an industry loss trigger and annual aggregate basis over a three-year term, covering Convex Re, the Convex group reinsurance entity, as well as subsidiary entities.
The now targeted as $125 million to $150 million of Class A notes come with an initial base expected loss of 4.48% and were first offered to investors with price guidance for a spread of between 10% to 10.5%.
We’re now told that the price guidance has been updated, to a range of 9% to 10%, showing pricing is likely to fall at the low-end of initial guidance or below that level.
At the mid-point of the updated price guidance this third Hypatia Ltd. catastrophe bond for Convex would come with a spread multiple-at-market of just 2.12 time expected loss, far lower than its 2023 cat bond at 3.77 times EL and the 2020 cat bond at 3.2 times EL. Even at the top of the updated range of spreads the 2025-1 cat bond would have a multiple of just 2.23 times EL.
Which reflects the softer price environment across reinsurance, retrocession and catastrophe bonds in 2025, as well as the fact industry-loss triggered cat bonds have in some cases been executed at particularly low multiples of late.
You can read all about Convex’s third catastrophe bond, this Hypatia Ltd. (Series 2025-1) transaction, and almost every other cat bond ever issued in the Artemis Deal Directory.
