The Hanover Insurance Group, Inc. has raised the target size for its new Commonwealth Re Ltd. (Series 2025-1) catastrophe bond sponsorship, with now up to $200 million of multi-peril reinsurance limit sought, while at the same time the price guidance for the notes has been lowered, Artemis understands.
US primary insurer The Hanover Insurance Group returned to the catastrophe bond market earlier this month, with an initial target to secure $150 million of reinsurance protection from what is its third cat bond sponsorship under the Commonwealth Re structure.
As we explained at the time, this third Commonwealth Re catastrophe bond sees The Hanover looking for expanded reinsurance protection compared to its first two cat bonds that were both US wind focused, both through the inclusion of additional perils, but also a US nationwide coverage approach with this new deal.
You can read about all of The Hanover’s catastrophe bonds by filtering our Deal Directory by sponsor.
Now, we’ve learned that the size target for this Commonwealth Re 2025-1 cat bond for The Hanover has been raised to between the initial $150 million and now up to $200 million of reinsurance limit.
At the same time, we’re told the price guidance on the notes has been revised and updated to a new range below the initial one that was on offer.
Commonwealth Re Ltd. will issue a single tranche of Series 2025-1 Class A notes that are designed to provide indemnity and per-occurrence based reinsurance to The Hanover covering the perils of US named storm, earthquake, severe thunderstorm, winter storm and wildfire, across three years from July 1st through to the end of June 2028.
The now up to $200 million tranche of Class A notes come with an initial base expected loss of 1.02% and were initially offered to investors with price guidance for a spread of between 4% and 4.5%.
Sources have said that the price guidance range has been updated and lowered, to a revised range of a risk interest spread of between 3.5% and 4%.
As a result, it appears The Hanover may be set for strong execution of its latest and third catastrophe bond deal, with the potential to upsize on the initial amount of reinsurance that was targeted, while the spread to be paid looks likely to come in at the bottom-end of initial guidance or below.
You can read all about this Commonwealth Re Ltd. (Series 2025-1) catastrophe bond from The Hanover and every cat bond transaction ever issued in the extensive Artemis Deal Directory.
