Two extra excellent disaster bonds which are uncovered to potential losses from hurricane Ian have been marked down additional on secondary pricing sheets, as US major insurer American Integrity has elevated its estimate for the storm, Artemis has realized.
We final reported on the Integrity Re disaster bonds again in January 2024, when the outlook deteriorated for them after American Integrity launched an up to date estimate for final web losses from hurricane Ian in December.
As soon as once more, an replace has been given, with the quantum of losses anticipated from the hurricane having risen once more, additional demonstrating the danger of loss creep from prior yr occasions.
As we reported earlier this week, the Hestia Re Ltd. (Series 2022-1) catastrophe bond sponsored by Kin Insurance had been marked down and its sponsor had cited new litigation ways in Florida as a driver of rising claims quantities.
It’s not clear the rationale for American Integrity’s rising estimate of losses, however it’s doable the corporate has skilled related loss creep pushed by the claims setting in Florida nonetheless not being totally rectified by the property insurance coverage reforms that had been enacted within the state.
Again to American Integrity’s cat bonds and the 2 partially marked down points by Integrity Re Ltd. have now been marked down additional, because the UNL reported by the sponsor has risen, we’re instructed.
Recall that, already probably the most at-risk cat bond sponsored by American Integrity, the $150 million Integrity Re II Pte. Ltd. (Series 2020-1) issuance, had been marked down and the market nonetheless anticipates a complete loss for these notes.
In the meantime, the $50 million Integrity Re Ltd. (Series 2019-1) Class A issuance had been marked right down to round bids of fifty again in January, then to bids of round 20 final month, however now we’re instructed this tranche has seen its worth lowered additional, with some sheets now marking them nearly to zero, implying one other case the place the market feels a complete lack of principal is feasible.
Lastly, the $75 million Integrity Re Ltd. (Series 2022-1) cat bond notes had been marked down for bids as little as 80 again in January, however by August this was as little as bids of fifty and now after the estimate was up to date by the sponsor we’re instructed some pricing sheets have them marked as little as for bids of 10 to twenty cents on the greenback.
We’re instructed there stays some uncertainty and that pricing sheets appear to be marking the notes extra aggressively than the newest UNL estimate from American Integrity implies, which suggests further loss creep is believed seemingly by the cat bond market.
American Integrity had beforehand opted to increase the maturity dates for the 2 Integrity Re cat bonds proper out to 2028, that means there could also be a while left till remaining losses are understood, that means the cat bond backed reinsurance safety stays accessible to the sponsor as its hurricane Ian loss is finalised.
