Vermont Mutual Insurance Company has now raised the target size of its new Baldwin Re Ltd. (Series 2025-1) catastrophe bond issuance, with the company now looking to secure up to $250 million of capital markets-backed reinsurance protection to cover losses in north east US states.
At that original $200 million target, it was already set to become Vermont Mutual’s largest cat bond to date. However, sources have now told us that the insurer is looking to secure between the initial $200 million and as much as $250 million of reinsurance protection through this Baldwin Re Ltd. (Series 2025-1) issuance.
The insurer sponsored its debut cat bond in 2021, securing $150 million in multi-peril reinsurance across a four year term with the Baldwin Re 2021-1 deal.
For those unaware, that first cat bond for Vermont Mutual matures this June, as a result this new issuance appears a renewal and attempted upsizing of the reinsurance coverage it provided.
Vermont Mutual then returned to the cat bond market in 2023 and sponsored a $100 million Baldwin Re Ltd. (Series 2023-1) cat bond, which added to its capital markets backed reinsurance and remains in-force until mid-year 2027.
As a reminder, you can read about all of the Vermont Mutual sponsored catastrophe bonds in our Deal Directory by filtering the list by sponsor.
As we’ve previously explained, for this Baldwin Re 2025-1 deal, Bermuda based special purpose insurer Baldwin Re Ltd. will issue a single tranche of Series 2025-1 Class A notes, that will be sold to investors and the proceeds used to collateralize a reinsurance agreement covering the sponsor Vermont Mutual, as well as its named affiliates Northern Security Insurance Company, Inc. and Granite Insurance Company.
As mentioned, we now understand that the target is for Baldwin Re Ltd. to issue between the initial $200 million and as much as $250 million in Series 2025-1 Class A notes.
With Vermont Mutual looking to secure up to $250 million of reinsurance, this will become the largest cat bond for the company and like the others it will provide Vermont Mutual Insurance and subsidiaries with four years of catastrophe reinsurance to the end of June 2029, on an indemnity and per-occurrence basis.
The covered perils are the same as the 2023 deal, being US Northeast, named storm, earthquake, severe weather, and fire, while the covered area is also the same, being Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.
The now up to $250 million of Baldwin Re Ltd. Series 2025-1 Class A notes come with an initial attachment probability of 1.453%, an initial base expected loss of 1.1% and they were first offered to cat bond investors with initial price guidance for a spread of between 3.75% and 4.25%.
We’re now told that the spread guidance has been lowered to the single figure of 3.75%, so the bottom of the initial range.
We’ll keep you updated as this Baldwin Re Ltd. (Series 2025-1) issuance progresses to final pricing and settlement.
You can read all about this new Baldwin Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond deal in our extensive Artemis Deal Directory.
