American Coastal Insurance Company (AmCoastal Insurance) is back in the catastrophe bond market, this time seeking multi-peril reinsurance from the capital markets with an initially $200 million target for an transaction, Artemis can report.Notably, this Armor Re II Series 2026-1 catastrophe bond will be the first Florida-focused multi-peril cat bond where American Coastal Insurance Company is the sole sponsor.The insurer sponsored two Armor Re II catastrophe bonds in 2024, with and Armor Re II Ltd.(Series 2024-2) both being $200 million in size and providing AmCoastal with Florida named storm reinsurance from the capital markets.

American Coastal Insurance Company (AmCoastal Insurance) is certainly no stranger to the cat bond market, with this new issuance set to be the seventh to take the Armor Re name and its first sole sponsorship having been back in 2013.There are a number of Armor Re cat bonds where United and Interboro entities were also cedents to the reinsurance..

AmCoastal is using its Bermuda-based special purpose insurer Armor Re II Ltd.again for this visit to the catastrophe bond market.The vehicle is offering two tranche of Series 2026-1 notes, that will be offered and sold to investors with the proceeds used to collateralize reinsurance agreements between the SPI and American Coastal Insurance Company.

These Armor Re II 2026-1 notes will provide American Coastal with a just over three-year source of Florida focused reinsurance protection, for losses from the perils of named storm, earthquake fire following, severe weather and fire, we are told.It’s worth noting though, that on a contribution to expected loss basis it is named storms and hurricanes that make up the majority of the risk for these cat bond notes.The term of coverage will run from June 1st this year until the end of May 2029, with maturity due early the following month, so this is a three year deal, we understand.

The notes have been structured to protect AmCoastal with Florida mulit-peril reinsurance coverage for the losses from the perils named above on an indemnity trigger and per-occurrence basis over that risk period.Armor Re II is looking to issue a $100 million tranche of Class A notes, with their coverage set to attach at $50 million of losses to AmCoastal Insurance and exhaust at $250 million.While this seems low, we are told reinsurance layers and the FHCF will inure to these notes, making their effective first event attachment far higher at around $1.43 billion.

The $100 million of Series 2026-1 Class A notes that Armor Re II Ltd.is offering come with an initial attachment probability of 0.51%, an initial expected loss of 0.44% and are being offered to cat bond investors with spread price guidance in a range from 5.5% to 6.25%, sources said.A second $100 million tranche of Class B notes are far riskier and sit down below and wrapping around AmCoastal’s expected FHCF coverage, we understand.

The Class B notes will attach their reinsurance coverage at $225 million of losses and exhaust at $425 million, which gives them an initial attachment probability of 6.42%, an initial expected loss of 4.22% and they are being offered to cat bond investors with spread price guidance in a range from 14.5% to 15.55%, we are told.Both tranches of notes have ample room to upsize, should the sponsor elect to source more reinsurance from the capital markets, while their differing risk metrics mean there is plenty for investors to choose from as well.You can read all about this new catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory..

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