Louisiana Citizens targets its largest cat bond with $280m Bayou Re 2025-1 as price guidance narrows

Louisiana Citizens Property Insurance Corporation, a non-profit residential and commercial property insurer for those unable to access private market insurance in the state, is now targeting $280 million of collateralized named storm reinsurance from its Bayou Re Ltd. (Series 2025-1) catastrophe bond issuance, while the spread guidance has narrowed from initial guidance, Artemis has learned.

Bayou Re Ltd. (Series 2025-1) is the eleventh cat bond sponsored by Louisiana Citizens that we have listed on our extensive Deal Directory.

Initially, the insurer had targeted $200 million of collateralized named storm reinsurance protection from its latest cat bond, but sources have told us that the target size has increased by 40% to $280 million.

At this size, it would be Louisiana Citizens largest cat bond ever, being $5 million larger than the $275 million Bayou Re 2024-1 issuance.

This is the third takedown of a cat bond under the Bayou Re Ltd. special purpose insurer (SPI) in Bermuda, and comes to market as the sponsor looks to continue the build-out of its multi-year hurricane and named storm reinsurance protection with the support of capital market investors.

Bayou Re Ltd. will offer and sell to investors a $280 million single Class A tranche of Series 2025-1 notes, with the proceeds used to collateralize a reinsurance agreement between the SPI issuer and Louisiana Citizens.

Structured using an indemnity trigger and on a per-occurrence basis, across a three-year term, the cat bond notes protect Louisiana Citizens with a source of reinsurance coverage against losses from named storms in the state.

The Series 2025-1 Class A notes Bayou Re Ltd. come with an initial attachment probability of 1.93%, an initial base expected loss of 1.69% and were initially being offered to cat bond funds and investors with spread price guidance in a range from 7.5% to 8%.

However, sources have confirmed that the spread guidance has tightened and the notes are now being offered to investors with a spread range of 7% to 7.5%, so falling below the upper-end of initial spread guidance.

You can read all about this new Bayou Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond issued in the extensive Artemis Deal Directory.