Fidelis Insurance has now secured its upsized target of $90 million of worldwide aggregate retrocession through the new Herbie Re Ltd. (Series 2025-1) catastrophe bond issuance, while the notes have now been priced at the low-end of initial guidance, Artemis can report.
Fidelis Insurance ventured back to the catastrophe bond market earlier in May, initially aiming to secure $75 million of broad aggregate retrocessional reinsurance for perils across the globe with this new Herbie Re 2025-1 deal.
As we said in our initial report, this new issuance seems to be an attempt to at least in part renew worldwide annual aggregate retrocession that Fidelis’ $150 million Herbie Re 2021-1 catastrophe bond had provided.
That 2021-1 cat bond has been affected by losses, with Fidelis expected to benefit from a reinsurance recovery after events including 2024 hurricanes and the January 2025 California wildfires resulted in qualifying annual aggregate losses under the deal exceeding its attachment point. That 2021 deal also matures at the end of this month.
As we then reported in an update on this new cat bond, Fidelis’ target for the Herbie Re 2025-1 issuance had risen, with $90 million of retrocessional protection being sought from the capital markets.
Now, we’ve learned from sources that the upsized target has been achieved and this Herbie Re 2025-1 catastrophe bond will settle to provide Fidelis a $90 million source of retrocession.
Once settled, this will become the seventh Herbie Re catastrophe bond transaction to be sponsored by Fidelis Insurance, since it first debuted in the cat bond market back in 2020.
With the size of the issuance now finalised, Herbie Re Ltd. will issue a confirmed $90 million tranche of Series 2025-1 cat bond notes, with the proceeds set to collateralize a source of annual aggregate and worldwide multi-peril retrocessional protection for Fidelis.
The notes will provide Fidelis with $90 million of coverage for many of the world’s peak catastrophe perils, with the retro protection structured on an annual aggregate and industry loss index basis, across a two-year term and two annual risk periods to the end of May 2027.
The notes have now been priced and the spread was finalised at the low-end of initial guidance.
The Herbie Re Series 2025-1 Class A cat bond notes come with an initial expected loss of 8.79% and were at first being offered to investors with price guidance in a range from 31% to 32%, but as we reported in our last update that was lowered to an initial risk interest spread of 31%, which is where we’re now told the spread has been finalised for this cat bond.
It is encouraging to see Fidelis successfully securing a new upsized slice of retrocessional protection from the cat bond market and benefiting from strong execution, with the pricing coming in at the bottom of guidance.
It is also good to see this cat bond complete given it is a higher-risk offering than the typical cat bonds we see, while providing broad worldwide peak catastrophe peril protection for its sponsor, which again is still a rarity in the cat bond market at this level of expected loss.
Read all about this Herbie Re Ltd. (Series 2025-1) catastrophe bond comes to market and you can read about this and every other cat bond deal in the Artemis Deal Directory.
