The Andover Companies has now secured $250 million of collateralized catastrophe reinsurance from its new Locke Tavern Re Ltd. (Series 2026-1) catastrophe bond sponsorship, more than replacing the soon to mature protection from its 2023 deal, Artemis can report.
The first Locke Tavern Re cat bond secured the sponsor $175 million of multi-peril catastrophe reinsurance protection backed by capital market investors, to protect its main underwriting entities and it is due to mature at the beginning of April 2026.
The Andover Companies came back to the catastrophe bond market in February with this new Series 2026-1 renewal transaction, initially aiming to secure $200 million of reinsurance from the offering.
As we reported in an update on this offering, the target size of the issuance was revised upwards to secure between $250 million and as much as $300 million, while at the same time the pricing moved to the lower ends of initial guidance.
We’re told by sources that the Andover Companies has successfully priced the notes of this new issuance at the lower levels and now settled for $250 million of reinsurance from its second cat bond sponsorship, so upsizing considerably on the soon to mature 2023 bond.
As a result, with the size and pricing of this catastrophe bond now finalised, Locke Tavern Re Ltd. will issue $250 million of notes across the two Series 2026-1 tranches that are being sold to investors, to provide fully-collateralized multi-peril US northeast catastrophe reinsurance, on an indemnity trigger and per-occurrence basis, across a three-year term to the end of March 2029 for sponsor the Andover Companies.
The notes will provide the sponsor with reinsurance protection against major losses from Northeast US named storm, severe thunderstorm, winter storm and earthquake risks, while the covered area will again span the states of Connecticut, Illinois, Maine, Massachusetts, New Hampshire, New Jersey, New York and Rhode Island.
What was initially a $100 million tranche of Series 2026-1 Class A notes were then targeted at between $125 million and $150 million in size, but have now been finalised as a $125 million offering. These notes come with an initial base expected loss of 1.302% and were first offered with price guidance in a range from 3.25% to 3.75%, which was adjusted to the low-end of 3.25% and that is where we are told the notes have now been priced.
What was initially a $100 million tranche of Series 2026-1 Class B notes were also later offered at between $125 million and $150 million in size and again the Andover Companies has finalised at the $125 million sizing. These notes come with an initial base expected loss of 1.96% and were initially offered with price guidance in a range from 4.25% to 4.75%, which was later lowered to the bottom-end at 4.25% and sources have told us this is where these notes have been priced.
As we had previously explained, reflecting currently favourable pricing conditions in the catastrophe bond market these spread multiples are considerably lower than the Andover Companies soon to mature cat bond featured.
As we stated, that Locke Tavern Re 2023-1 cat bond had an initial expected loss of almost 0.92% and priced to pay investors a spread of 4.75%, so a significantly higher multiple than has now been achieved with both of these renewal tranches.
As a result the multiple-at-market of the 2023 notes was 5.16 times the initial expected loss. While, for the 2026-1 cat bond, the Class A notes will pay a multiple of 2.49 times and the Class B notes 2.17 times their EL’s, reflecting current tighter pricing conditions.
It’s encouraging to see the Andover Companies expanding its catastrophe bond coverage with its second sponsorship, to more than replace the maturing 2023 bond while securing the reinsurance protection at attractive pricing.
You can read all about this new Locke Tavern Re Ltd. (Series 2026-1) catastrophe bond, as well as details on over 1,000 other cat bond transactions in the extensive Artemis Deal Directory.
