We’re told that insurer USAA is targeting even lower pricing for its new multi-peril per-occurrence catastrophe bond issuance, the deal, with the guidance for both tranches of notes on offer reduced for a second time.USAA returned to the cat bond market at the end of September, initially seeking $300 million or more in multi-peril per-occurrence catastrophe reinsurance protection.This new Residential Re 2025-2 cat bond is the 46th transaction we have tracked from long-standing sponsor USAA and there are now .We previously reported in, a first update on this cat bond, that , while also seeking a lower price point for the coverage through a reduced spread.

The spreads were already well-down on those seen in the comparable per-occurrence cat bond from USAA a year ago, but now we’re told they are even lower after a second update.This issuance is the regular fourth-quarter per-occurrence cat bond deal from USAA, with two tranches of notes still targeted to be $200 million each in size since .The two tranches of notes will provide USAA with four years of indemnity per-occurrence based reinsurance protection against losses from multiple US catastrophe perils, with the term of coverage set to run from December 1st 2025 through November 30th 2029.

Pricing fell at the first update for this new ResRe 2025-2 cat bond, but it has now fallen again, indicating continued market tightening.The $200 million Class 2 notes come with an initial base expected loss of 6.47%.They were initially offered to cat bond investors with price guidance of 11.75% to 12.5%, which first fell to between 10.75% and 11.75%.

Now, we’re told the price guidance for the Class 2 notes has been reduced again, to between 10.25% and 10.75%.The $200 million Class 5 notes come with an initial base expected loss of 1.82%.Initially these notes were offered to cat bond investors with price guidance of 4% to 4.5%, but that too feel to between 3.5% and 4%.

Now, the Class 5 notes price guidance has also fallen further, to a revised range of 3.25% to 3.5%, we are told.It reflects the demand for new cat bond issuance paper in the market at this time, which is serving to compress spreads.It’s also indicative of the fact higher-layer US property catastrophe reinsurance pricing is expected to decline at the January 2026 renewal season.

Once again though, the cat bond market is front-running the traditional reinsurance market, allowing that market a chance to see what kind of pricing it may expect to experience later in the year.To provide an idea of how much this deal has seen its pricing tighten, at launch the multiple-at-market at the mid-point of guidance for the higher risk Class 2 tranche of notes would have been 1.87 times their expected loss (EL), while the multiple-at-market at the mid-point would have been almost 2.34 times EL for the lower risk Class 5 tranche.Now, after the price guidance has been lowered twice, at the mid-points of the latest pricing the multiple for the Class 2 notes would be 1.62 times their initial base expected loss, while for the Class 5 notes it would be 1.85 times their EL.

We’ll wait to see where the deal settles before we start talking about percentage price declines, but it looks set to be well into the double-digits for both of the tranches of notes from USAA’s latest catastrophe bond deal.With is the most prolific sponsor and program in the market, a regular and consistent feature since the cat bond instrument was first seen in late 1996 when USAA’s first began marketing.You can read all about this new  catastrophe bond from USAA and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory..

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