Avatar’s Casablanca Re cat bond term shortened to one-year

The term of Avatar Property and Casualty Insurance Company’s latest catastrophe bond was shortened to one year just before its issuance, as the insurer settled for a single year of reinsurance coverage from the $65 million Casablanca Re Pte. Ltd. (Series 2020-1) transaction.

The reason for the shortening of the term of Avatar’s new catastrophe bond is almost certainly related to the pricing, with the sponsor likely to have opted for a single year of Florida named storm reinsurance protection rather than locking in the cost of coverage over the originally proposed three-year term.

The Casablanca Re 2020-1 catastrophe bond was launched at a target size of $65 million last month, aiming to provide Avatar at least a partial renewal of its soon to mature $100 million Casablanca Re Ltd. (Series 2017-1) transaction.

This is Avatar’s second cat bond issuance, but its first to be domiciled in Singapore.

The transaction was supposed to provide Avatar with indemnity reinsurance protection, on a cascading and per-occurrence basis, against losses from Florida named storms (so tropical storms and hurricanes), to begin, the covered area could be expanded at future resets, across a three-year term.