The Hartford, a US primary property and casualty insurer, is back in the catastrophe bond market seeking $270 million or more in multi-peril collateralized catastrophe reinsurance protection from the capital markets through sponsorship of a Foundation Re IV Ltd. (Series 2026-1) cat bond issuance.
Notably though, this is the second cat bond from The Hartford in two years, as the insurer now looks to begin layering reinsurance protection and staggering maturities from the capital markets again, having previously had a gap of over a decade since a cat bond deal it sponsored in 2011.
The Hartford secured $200 million of multi-peril catastrophe reinsurance from the Foundation Re IV 2023-1 catastrophe bond and that protection remains in-force until the end of 2026, so it’s encouraging to now see the insurer back and seeking an even larger cat bond to layer cat bond protection further through its reinsurance tower arrangements.
You can read about every Foundation Re catastrophe bond from The Hartford in our extensive Deal Directory.
The Hartford is for the second time using Bermuda-based special purpose insurer (SPI) Foundation Re IV Ltd. as the issuing vehicle for its latest catastrophe bond.
Foundation Re IV Ltd. is targeting issuance of a single tranche of Series 2026-1 Class A notes that will be sold to investors and the proceeds used to collateralize a reinsurance agreement between the issuer and ceding company, with the beneficiaries being Hartford Fire Insurance Co. and subsidiaries, we have been told
The goal is to secure at least $270 million of protection with this issuance and the Hartford is specifically seeking collateralized US named storm and earthquake protection, including for D.C. and Puerto Rico, across a four calendar year term running to the end of 2029. We understand this protection will be on an indemnity trigger and per-occurrence basis.
The notes are expected to attach their coverage after $1.6 billion of losses, covering a share up to $1.9 billion, giving some room for this new cat bond from the Hartford to upsize a little to fill this $300 million layer.
The currently $270 million of Series 2026-1 Class A notes that Foundation Re IV Ltd. is set to issue will come with an initial attachment probability of 1.35%, an initial base expected loss of 1.18% and they are being offered to cat bond investors with spread price guidance in a range from 3.75% to 4.25%, sources said.
For a rough comparison, The Hartford’s Foundation Re 2023 cat bond had an initial attachment point of $1.1 billion, its expected loss was 1.36% and the notes initially paid investors a spread of 6.25%, so a significantly higher multiple-at-market than these new notes are being offered at.
It’s good to see The Hartford return with a new cat bond that is designed to expand on its reinsurance from the capital markets, being larger and with a longer-tenure than the still in-force 2023 deal from the company.
You can read all about this new Foundation Re IV Ltd. (Series 2026-1) cat bond transaction in our Deal Directory, where you can analyse details of almost every catastrophe bond ever issued.
