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NC - NCIUA's new cat bond hits $250m raised target, price drops 13%

The North Carolina Insurance Underwriting Association (NCIUA) latest catastrophe bond has now upsized by 150%, with the Cape Lookout Re Ltd. (Series 2021-1) transaction set to provide it $250 million of reinsurance from the capital markets.

At the same time, the spread on the cat bond notes dropped considerably thanks to ILS investor appetite, with the pricing eventually fixed at the bottom of reduced guidance, indicating a roughly 13% decline in pricing during marketing.

The North Carolina Insurance Underwriting Association (NCIUA) is a coastal property insurance underwriting pool for the state of North Carolina.

It returned to the cat bond market at the end of February, targeting at least $100 million of collateralized catastrophe reinsurance with this new issuance.

As we’ve seen with a number of recent catastrophe bond issues, the new transaction from the NCIUA became the latest cat bond to show strong execution, both in terms of size and pricing.

The target size was lifted by 150% to $250 million of reinsurance coverage, a level that has now been secured.

At the same time the price guidance was reduced significantly and our sources said this has now been fixed at the low-end of the reduced guidance.

Now, on settlement, the NCIUA’s special purpose insurer (SPI), Cape Lookout Re Ltd., will issue a $250 million tranche of Series 2021-1 Class A notes, that will be sold to investors to secure multi-year and multi-peril collateralized reinsurance for the insurance underwriting pool.

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