Liberty Mutual, the American primary insurance giant and global reinsurance player, hopes to bring its new catastrophe bond transaction Mystic Re IV Ltd. (series 2023-1) at $150 million, but with pricing that’s high-end of guidance.
Like all other cat bond sponsors, regardless of size or market history, Liberty Mutual is expected to pay much higher rates for reinsurance protection backed by catastrophe bonds for 2023, it seems.
It will be Sponsor Liberty Mutual’s eighth Mystic Cat Bond and follows a similar format to its last deal in June 2021 (Mystic Re IV Series 2021-2), which was the insurers’ first Indemnity Cat Bond issuance. .
Mystic Re IV Ltd. aims to issue a single tranche of Series 2023-1 Class A Notes to provide Liberty Mutual with guaranteed reinsurance protection on an indemnity-triggered and per-event basis, for losses caused by storms and earthquakes appointed affecting the United States, Canada and the Caribbean and on a three-year term
The issue started with a target size of $125m, but we’re now told that target has been lifted, with Liberty Mutual hoping to raise its new Mystic Re cat bond to $150m.
The Class A Notes have an initial reattachment probability of 2.48% and an expected initial loss of 1.74%.
Series 2023-1 Class A Notes were first offered to investors with price indications in the range of 8.5% to 9.25%, but we are now told that prices are considered fixed at the high end, to pay investors a coupon of 9.25%.
We are told that there have also been some adjustments to threshold factors related to extension spreads, a key area of trading at the moment for any new cat bond.
The multiple in the market to pay for this new cat bond hedge is significantly higher than what Liberty Mutual paid for its 2021 cat bond, it seems.
You can read all about this catastrophe bond Mystic Re IV Ltd. (series 2023-1) of Liberty Mutual and all other cat bonds issued in the Artemis Deal directory.