American Coastal ponders first cat bond

American Coastal Insurance Company, the Florida insurer, has reportedly started marketing a cat bond that would provide it with Florida wind protection. This would be the first time that American Coastal will have used the capital markets to secure coverage.

Armor Re is seeking to issue a Series 2013-1 tranche of cat bond notes to provide a single year of protection for the issuer. The bond is initially being marketed at around the $125 million mark but is expected to increase in size.

The fact that yet another first time issuer will potentially use the capital markets to secure protection will be seen as yet another step forward for the insurance linked securities (ILS) markets which are seen as coming of age in the past 12 months. Experts are predicting a bumper year of issuance and initial deal flow suggests they will be right.