Cincinnati Insurance Companies has returned to the catastrophe bond market for the first time since 2017, seeking $150 million or more in fully-collateralized reinsurance from the capital markets with a Skyline Re II Ltd. (Series 2025-1) deal that will cover certain losses from multiple US perils, Artemis has learned.
The last cat bond from the company was a $180 million Skyline Re Ltd. (Series 2017-1) which was privately placed.
That deal saw principal eroded from an aggregate section after severe and convective thunderstorm losses breached the trigger of an $80 million tranche of notes.
Since then, Cincinnati Insurance Companies has been absent from the catastrophe bond market. So it’s encouraging to see the insurer return this year, targeting a full 144A cat bond issuance.
Skyline Re II Ltd. has been established in Bermuda to issue catastrophe bonds for the Cincinnati Insurance Companies, Artemis understands.
This Skyline Re II Series 2025-1 issuance sees a $150 million tranche of Class A notes being offered to investors, with the sale of the notes set to collateralize a multi-year reinsurance agreement to protect The Cincinnati Insurance Company and certain subsidiaries.
The cat bond notes will provide Cincinnati Insurance with a source of property catastrophe reinsurance coverage from the capital markets, protecting it against losses from the US perils of named storms, earthquakes, severe weather and fires, we are told.
The reinsurance coverage will be on an per-occurrence and indemnity trigger basis, running across a four-year term until the end of 2026.
The $150 million of Series 2025-1 Class A notes that Skyline Re II is offering will occupy and share in losses from an $800 million layer of the reinsurance tower, attaching at $1 billion of losses to Cincinnati Insurance, sources said.
The Class A notes come with an initial base attachment probability of 2.19%, an initial base expected loss of 1.27% and are being offered to cat bond investors with price guidance for a risk interest spread of between 4% and 4.75%, we understand.
It’s good to see another company opting for its first full Rule 144A catastrophe bond in 2025, with the Cincinnati Insurance Companies a meaningful buyer of reinsurance that could benefit from capital markets diversification within its risk transfer tower.
You can read all about this new Skyline Re II Ltd. (Series 2025-1) catastrophe bond and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory.
