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Validus turns to cat bond market for retro coverage

Validus Holdings Ltd. is bringing its first full catastrophe bond to the market in a bid to secure collateralized reinsurance and retrocession covering the multiple perils of U.S., Canada, Puerto Rico and U.S. Virgin Islands named storms and earthquakes for four years, Artemis wrote.

The reinsurer's launch of the $325 million Tailwind Re Ltd. series 2017-1 transaction comes amid the speculation that the retro market could see steep price increases following a surge in the catastrophic activity this year. The insurance-linked securities blog said while traditional reinsurers are discussing price increases of 20% to 40%, recent cat bond issuance points to rake hikes of only 5% to 15% in risk adjusted terms in the insurance-linked securities market.

Tailwind Re Ltd., a newly formed Bermuda special purpose insurer, will offer three tranches of series 2017-1 notes to investors, consisting of a $125 million class A tranche, with an expected coupon price guidance of 7.75% to 8.5%; a $125 million class B tranche of notes, with price guidance of 9.5% to 10.25%; and a $75 million class C tranche, with price guidance of 11.5% to 12.5%.