American Family Mutual Insurance Company (AmFam) has now secured the 33% upsized $200 million of multi-peril US catastrophe reinsurance protection from the capital markets through its new Four Lakes Re Ltd. (Series 2025-1) catastrophe bond issuance, while the spreads were finalised at the low-end of reduced guidance.
This transaction was first launched to investors back in November, with AmFam initially targeting a $150 million source of fully-collateralized multi-peril catastrophe reinsurance with this Series 2025-1 issuance.
As we then reported in a first update on this Four Lakes Re 2025-1 cat bond, AmFam raised its ambitions with the target size of the issuance growing by one-third to $200 million, while the price guidance fell for each of the two tranches of notes on offer.
Now, we’re told that AmFam has achieved this raised target, with the company securing the higher level of US catastrophe reinsurance, while the notes have priced at the low-ends of their reduced spread guidance.
So, now finalised and priced the two tranches of Four Lakes Re Series 2025-1 cat bond notes will provide AmFam with a $200 million fully-collateralized source of per-occurrence and indemnity triggered reinsurance cover against losses from named storms, earthquakes, severe thunderstorms, winter storms and wildfire events affecting the United States over a three-year term running from January 2026 to the end of December 2028.
What was initially marketed as a $50 million tranche of Series 2025-1 Class A notes have been upsized 50% to $75 million in size.
The Class A notes come with an initial expected loss of 0.85% and were first offered to cat bond investors with price guidance for a risk interest spread in a range from 3.75% to 4.5%, which was later reduced to a revised range of between 3.25% to 3.75%. We’re now told these notes have been priced to pay investors a spread of 3.25%, so the bottom-end of the reduced range.
What was initially marketed as a $100 million tranche of Series 2025-1 Class B notes have been upsized 25% to $125 million in size.
The riskier Class B tranche of notes come with an initial expected loss of 2.91% and were first offered to investors with risk interest spread price guidance in a range from 6.5% to 7.5%, which was later reduced to a revised range of 6% to 6.5%. We’re now told these notes have been priced to pay investors a spread of 6%, so below the initially marketed range.
As a result, AmFam has now managed to secure some of the lowest priced catastrophe bond backed reinsurance protection in the history of the Four Lakes Re cat bond deals, with this Four Lakes Re 2025-1 issuance.
As a reminder, you can read all about this new Four Lakes Re Ltd. (Series 2025-1) catastrophe bond from American Family in the Artemis Deal Directory.
