Charles River Re cat bond addresses coastal flood protection gap: ShoreOne & AEIC

The recently settled $125 million Charles River Re Ltd. (Series 2024-1) catastrophe bond is a valuable addition to the reinsurance arrangements that support MGU ShoreOne Insurance Managers and carrier American European Insurance Company’s efforts to address the coastal flood risk protection gap, the two firms have said.

As Artemis has been reporting since March 12th, American European Insurance Company launched its debut catastrophe bond to investors, with a target to secure at least $100 million in collateralized catastrophe reinsurance for a portfolio of policies underwritten by managing general agent (MGA) ShoreOne Insurance Managers, a coastal property specialist that offers all-perils coverage including flood.

In the end, the Charles River Re issuance resulted in the successful pricing of the upsized $125 million offering of notes notes at roughly 10% below the mid-point of initial spread guidance, as we detailed last week.

Now the two companies behind the deal, and the structuring agent and bookrunner GC Securities, have commented on the first Charles River Re catastrophe bond, highlighting its role in addressing a protection gap.

The pair said the cat bond provides “a diversification of risk transfer capacity and access to the capital markets.”

“This catastrophe bond is another milestone in ShoreOne’s history and in its partnership with American European,” explained Cameron Rhodes, President and Chief Operating Officer of ShoreOne.

“This risk transfer protection will strengthen our ability to jointly address the coverage gap for coastal homeowners and the associated flood risk they face.”

“Our catastrophe bond is an essential part of our reinsurance structure and complements a tower backed by industry-leading reinsurers,” added Nachum Stein, CEO of American European.

“We are pleased to have successfully sponsored our first catastrophe bond, and done so in partnership with ShoreOne, our valued partner in the coastal homeowner’s market. We are grateful for the strong investor support for our collective mission.”

As detailed in our Deal Directory entry, the Charles River Re 2024-1 cat bond issuance was upsized by 25%, while the notes priced at a spread of 6.75%, some 10% below the initial guidance mid-point.

The notes have an initial base expected loss of 1.87% and provides reinsurance based on an indemnity trigger over a three-year term with scheduled maturity on May 10th, 2027.

GC Securities, a division of MMC Securities LLC and part of reinsurance broker Guy Carpenter, was the sole structuring agent and bookrunner for this cat bond issuance.

“We’re proud to have supported American European and ShoreOne’s inaugural catastrophe bond issuance,” Liam Martens, Senior Vice President of GC Securities stated.

Adding, “We are pleased that investors strongly supported this important protection gap initiative and welcomed an MGU and its carrier partner to the catastrophe bond market for the first time in the market’s history.”

You can read all about this new Charles River Re Ltd. (Series 2024-1)  catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.