February 21, 2024


The recently launched and still marketed Acorn Re Ltd. (Series 2023-1) parametric earthquake catastrophe bond deal has had its target raised to a current high of $175 million, while pricing has also been lowered.

Parametric Earthquake InsuranceLaunched to cat bond investors in early June, the new Acorn Re Parametric Cat Bond aims to secure $100 million in venture capital to support earthquake insurance for beneficiaries.

Each of the Acorn Re parametric catastrophe bond transactions saw Hannover Re as a ceded reinsurer, ahead of a ceded insurer named Oak Tree Assurance Ltd., a Vermont-based workers’ compensation Captive insurance company owned by Kaiser Permanente, a group of health plan companies.

Accordingly, these U.S. West Coast-focused parametric earthquake catastrophe bonds Acorn Re provide Kaiser Permanente workers’ compensation captives with reinsurance coverage covering their insurance exposure to earthquake risk in the region, primarily in California, while also For other Hannover Re exposed in parametric seismic boxes.

You can read all Acorn Re Series parametric cat bonds in our trade directory.

For this new offering, Acorn Re Ltd. seeks to issue a single US$100 million Class A note to provide per-occurrence parametric reinsurance protection against earthquakes on the West Coast of the United States for a term ending in October 2026.

We are now being told that the size may increase, with up to $175 million of risk transfer currently being sought through this parametric catastrophe bond arrangement.

At the same time, we’re told that the price guidance for the notes has been slashed.

At launch to investors, the Acorn Re 2023-1 cat bond has an annualized initial expected loss of 0.91%, with a spread guidance range of 4.75% to 5.5%.

Sources tell us that the range has been narrowed, with spread guidance now ranging from 4.25% to 4.75% for the larger notes of up to $175 million.

Thus, it now appears likely that the size and price of the Acorn Re 2023-1 parametric earthquake cat bond will grow below guidance.

You read all about this new Acorn Re Ltd. (Series 2023-1) deal and all the other cat bonds in the Artemis Deal Directory.

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