Allied World targets $250m renewal of 2001 CAT Re catastrophe bond


Allied World Assurance Company (AWAC), the global insurance and reinsurance company that is part of the Fairfax Financial group, has returned to the catastrophe bond market looking to renew its maturing deal, seeking a larger $250 million of protection with this 2001 CAT Re Ltd. (Series 2023-1)  transaction.

Allied World had sponsored its first catastrophe bond back in November 2020, securing a $210 million 2001 CAT Re 2020-1 source of multi-peril retrocession to cover three calendar years from January 2021.

With that cat bond coverage maturing at the end of 2023, Allied World is now back for a renewal of the retrocessional reinsurance protection it provides and the target for coverage has increased, to $250 million, while one of the covered perils has been dropped from the deal, Artemis can reveal.

Allied World is using its Bermuda based special purpose insurer (SPI) 2001 CAT Re Ltd. again for its second catastrophe bond sponsorship.

2001 CAT Re Ltd. will issue a single Class A tranche of Series 2023-1 notes that will be sold to cat bond investors and the proceeds used to collateralize the underlying reinsurance arrangements, to provide the coverage to Allied World and a certain of its underwriting subsidiaries including Lloyd’s syndicate 2232, its European and US underwriting arms.

The Class A notes to be issued by 2001 CAT Re Ltd. are targeted at $250 million in size, so this looks set to be a larger cat bond than the maturing first issuance under the program.

The Series 2023-1 Class A notes will protect Allied World and subsidiaries against certain losses from U.S named storms, U.S. and Canada earthquakes, and European windstorm risks.

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The previous and soon to mature 2021 cat bond also provided Allied World with US severe thunderstorm coverage, but we understand that has been dropped from the renewal.

The coverage from this new 2001 CAT Re 2023-1 cat bond will be provided on a per-occurrence basis across three annual risk periods from January 1st 2024, with the notes able to be triggered by qualifying industry loss events that breach predefined index trigger points, as measured by PCS and PERILS.

The soon to mature 2021 cat bond for Allied World provided annual aggregate protection, so that is another change to the renewal deal.

PCS triggers are being used for the U.S. and Canadian perils, while PERILS AG will report on European windstorm loss events, we’re told.

The $250 million of Series 2023-1 Class A notes to be issued by 2001 CAT Re Ltd. will have an initial attachment probability of 8.41% and an initial expected loss of 5.13%, we’re told.

These notes are being offered to cat bond investors with spread price guidance in a range from 14% to 15%, we understand.

It’s good to see another catastrophe bond renewal and a sponsor becoming a repeat visitor to the cat bond market, as it implies cat bonds could become a regular component of the Allied World reinsurance and retro tower.

We’ll update you as this new 2001 CAT Re Ltd. (Series 2023-1) catastrophe bond proceeds to market and you can read all about this and more than 950 other cat bond transactions in the Artemis Deal Directory.

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