USAA has increased the target size for its new catastrophe bond with now $400 million in multi-peril per-occurrence catastrophe reinsurance protection sought from the deal, Artemis has learned.At the same time and indicative of continued high-levels of investor demand for new issuance paper, the price guidance ranges for both of the tranches of cat bond notes on offer have been lowered.USAA returned to the cat bond market at the end of September, 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 .

This issuance is the regular fourth-quarter per-occurrence cat bond deal from USAA and it now sees the military mutual insurer looking to secure $100 million more in protection from the deal, with both of the tranches of notes now targeted to be $200 million each in size.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.The first, Series 2025-2 Class 2 tranche of notes was preliminarily sized at $150 million, but are now targeted as a $200 million issuance.

The Class 2 notes come with an initial base expected loss of 6.47% and were initially offered to cat bond investors with price guidance of 11.75% to 12.5%, but that price guidance range has been lowered to between 10.75% and 11.75%, we are told.The second, Series 2025-2 Class 5 tranche of notes were also preliminarily sized at $150 million, but are now targeted at $200 million as well.The Class 5 notes come with an initial base expected loss of 1.82% and were at first offered to cat bond investors with price guidance of 4% to 4.5%, but that too has fallen to a revised price guidance range for a spread of between 3.5% and 4%, we understand.

The reduced spread guidance reflects the tightening seen in the catastrophe bond market over the last year, with these new tranches of Res Re notes now likely to settle at multiple levels below USAA’s occurrence deal in the fourth-quarter last year.It reflects continued strong demand-side dynamics.Which is typical for the first cat bonds to come to market at this stage of the year, given primary issuance has been typically quiet during the hurricane season until now and cat bond investors tend to have liquidity to deploy, enabling sponsors to benefit from strong execution.

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..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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