The North Carolina Farm Bureau has now secured the 54% upsized $500 million of reinsurance limit from its new Blue Ridge Re Ltd. (Series 2025-1) catastrophe bond issuance, while pricing settled well below guidance for most of the tranches of notes on offer, Artemis has learned.
The NC Farm Bureau had returned to the catastrophe bond market for a second time earlier this month, initially aiming to secure $325 million of reinsurance protection from the capital markets.
As we the reported in an update on this new catastrophe bond, the North Carolina Farm Bureau lifted the target size of the issuance to between $475 million and $500 million of reinsurance limit, while at the same time the price guidance was adjusted downwards twice for three of the tranches of notes on offer and fixed at the mid-point for the fourth, reflecting the strong issuance conditions in the cat bond market.
Now, we can report that the North Carolina Farm Bureau has successfully priced what will be its second catastrophe bond sponsorship, with the deal set to complete at the 54% upsized target size to provide $500 million of reinsurance protection.
Unsurprisingly as well, given the way cat bond deals are executing in the market at this time, we are told by sources that the notes have priced at their revised low-ends of guidance in each case for the three tranches that priced lower.
As a result, this Blue Ridge Re 2025-1 catastrophe bond will provide the sponsor with a $500 million capital markets backed source of reinsurance across three years of coverage for calendar years 2026 through 2028 across the state of North Carolina, for losses from named storms, severe thunderstorms and winter storms.
Two tranches of notes will cover named storms and severe thunderstorms on a per-occurrence basis, one will cover only named storms on a per-occurrence basis and a fourth tranche will provide annual aggregate protection for losses from named storms, severe thunderstorms and winter storms. All four tranches of notes feature an indemnity trigger.
What was originally a $100 million Series 2025-1 Class A tranche of notes have priced to provide $150 million in named storm and severe thunderstorm per-occurrence protection.
The Class A notes have an initial expected loss of 1.1% and were first offered to investors with price guidance in a range from 4% to 4.5%. That guidance first fell to 3.75% to 4%, then to 3.5% to 3.75%, and we’re now told have priced at the low-end for a spread of 3.5% to be paid.
What was originally a $100 million Series 2025-1 Class B tranche of notes have also priced to provide $150 million of named storm and severe thunderstorm per-occurrence protection.
The Class B notes have an initial expected loss of 2.38% and were first offered to cat bond investors with price guidance in a range from 7% to 7.5%. The guidance fell first to 6.5% to 7%, then to 6% to 6.5%, and we understand have also now priced for a spread at the lowest-end of 6%.
What was a $75 million Series 2025-1 Class C tranche of notes have priced to provide $100 million of just named storm per-occurrence protection.
The Class C notes have an initial expected loss of 3.76% and were first offered to investors with price guidance in a range from 9.25% to 9.75%. The guidance for these notes was first lowered to between 8.5% to 9.25%, then again to between 8% to 8.5%, and we now understand have priced to pay a spread of 8%, the low-end again.
The final Class D tranche of notes were originally sized at $50 million but have now priced to provide double that protection at $100 million, covering named storm, severe thunderstorm and winter storm losses on an annual aggregate basis.
The Class D notes have an initial expected loss of 1.3% and were originally offered to cat bond investors with price guidance in a range from 10.5% to 11.5%. That guidance was fixed at the mid-point at the first update, for a spread of 11%, which is where we understand them to now have been priced.
So, all four tranches have increased in size and the three occurrence tranches of notes saw their price guidance lowered twice and then finalised at the lowest-ends, while the aggregate notes doubled in size and priced at their initial mid-point.
A strong result all round for the North Carolina Farm Bureau from its second catastrophe bond sponsorship, indicative of the cost-efficient execution and reinsurance coverage being provided by the capital markets at this time.
The spread multiples are lower across all the three per-occurrence tranches of notes than their comparable tranches from the NC Farm Bureau’s previous cat bond issuance, the $400 million Blue Ridge Re Ltd. (Series 2023-1) that remains in-force to provide indemnity and per-occurrence structured named storm reinsurance until the end of 2026.
As a reminder, you can read all about this new Blue Ridge Re Ltd. (Series 2025-1) catastrophe bond and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory.
