The North Carolina Insurance Underwriting Association (NCIUA) has returned to the capital markets seeking $350 million of annual aggregate named storm reinsurance protection through this catastrophe bond.Returning in 2025, the North Carolina Insurance Underwriting Association (NCIUA) is sponsoring the seventh catastrophe bond under its Cape Lookout Re Ltd.program of deals.The NCIUA has now been a long-standing sponsor of catastrophe bonds since at least 2009, when the first cat bond to benefit the Association, , came to market.

This year, the NCIUA has a larger target from the start with its latest cat bond deal.A year ago, the NCIUA began targeting $250 million of reinsurance, but eventually secured $450 million in capacity from the transaction.The property insurer of last resort for North Carolina, the NCIUA, is once again aiming to secure annual aggregate named storm and hurricane reinsurance with its latest cat bond deal, with an initial target for $350 million or more in protection from this Cape Lookout Re 2025-1 deal, sources have told Artemis.

In the past, the NCIUA had also benefitted from severe thunderstorm protection through its cat bonds, but since 2023 this has been reduced to just the single peak peril of hurricane risk.Cape Lookout Re Ltd., the NCIUA’s Bermuda-based special purpose insurer (SPI), is targeting issuance of a single, preliminarily sized at $350 million, tranche of Series 2025-1 Class A notes, we understand.The cat bond notes are being offered for sale to investors and the proceeds will be used to collateralize a retrocessional reinsurance agreement between Cape Lookout Re Ltd.

and fronting reinsurer Hannover Re, who is supporting the NCIUA’s latest issuance again.That reinsurance company, in fronting the capital markets for the insurer of last resort, will then enter into a reinsurance agreement with the North Carolina Insurance Underwriting Association (NCIUA) to pass on the named storm protection to it.The $350 million or more in notes will provide the NCIUA with a source of indemnity and annual aggregate reinsurance protection from the capital markets, covering named storm losses.

This will protect the insurer across a three year term and, as in other recent Cape Lookout Re cat bonds, qualifying losses must exceed a $25 million or greater impact to the insurer of last resort in order to count towards the aggregated total.The Cape Lookout Re Series 2025-1 Class A cat bond notes will sit at an attachment of $2.8 billion of losses, participating in a layer of the reinsurance tower to $3.4 billion, giving them an initial attachment probability of 2.6%, an initial expected loss of 2.24% and coming with price guidance in a range from 6.75% to 7.25, we understand.Last year’s Cape Lookout Re 2024-1 cat bond had an initial expected loss of 2.56% and priced to pay investors a spread of 8%, so the multiple on offer in 2025 is much lower from the start, as you’d expect given recent catastrophe bond issuance execution and pricing.

These new Cape Lookout Re 2025-1 catastrophe bond notes will occupy a reinsurance layer between the 2023 and 2024 cat bond issuances.Which means they have the potential to upsize to $600 million in size, should investor appetite be able to support that.If that occurs, the NCIUA would have cat bonds filling out its reinsurance tower from $2.35 billion right the way up to $3.75 billion for the coming hurricane season, we understand.

You can read all about this new transaction and every other cat bond ever issued in our Artemis Deal Directory..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.