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Progressive’s ARX looks to upsize Bonanza Re cat bond as price rises


ARX Holding, the Progressive-owned parent of American Strategic Insurance Group, is aiming to upsize its latest catastrophe bond issuance, with now up to $70 million in multi-peril catastrophe reinsurance sought from a Bonanza Re Ltd. (Series 2023-2) transaction.

american-strategic-progressive-logoAt the same time, we’re told that the pricing for the zero-coupon, one-year catastrophe bond has been lifted higher, with ARX Holding set to pay more than initially targeted for the coverage.

The insurer returned to the cat bond market at the start of this month, seeking to sponsor issuance of its second catastrophe bond of 2023, to secure an initially targeted as $50 million single-year source of additional multi-peril catastrophe reinsurance.

Bonanza Re Ltd. will issue a single tranche of zero-coupon notes to provide collateralized indemnity and annual aggregate reinsurance for the Progressive insurance companies (we understand known as Progressive Home), against losses from the perils of US named storms, earthquakes, severe thunderstorms, winter storm, and wildfires, across a single year through 2024.

As we explained before, the Bonanza Re 2023-2 cat bond notes feature a two section approach to coverage, with an attachment at $425 million for named storm events and $525 million for all other perils, while covering the ARX Holding insurers, including American Strategic.

The Class A zero-coupon notes on offer were sized at $50 million, but we’re told this has now risen to between $60 million and $70 million.

The Bonanza Re Series 2023-2 Class A zero-coupon notes have an initial expected loss of 2.28%, and were first offered with price guidance of between 80% and 79% of par, a rough 20% to 21% spread equivalent.

We’re now told that offering price has been raised to 77% of par, which would reflect a rough spread of 23%.

So this looks set to be another catastrophe bond issuance that is successfully upsized, but at higher than initially targeted pricing, something which has happened a number of times through recent weeks as the cat bond investor community looks to hold a line on market pricing.

You can read all about this Bonanza Re Ltd. (Series 2023-2) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.

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