Assurant to price debut $150 mln catastrophe bond

By Catherine Evans

LONDON, April 28 (Reuters) - U.S. specialty insurer Assurant (AIZ.N: Quote, Profile, Research) is set to price a $150 million catastrophe bond, its first such transaction, investors said on Tuesday.

The transaction, to be issued via Cayman Islands-based special-purpose vehicle Ibis Re, will be split into two tranches of $75 million apiece.

Investors said Tranche A was likely to pay a coupon of 10.25 percent over Libor while tranche B was likely to be priced at 14.25 percent over Libor, both at the higher end of a range indicated during marketing earlier this month.

Goldman Sachs is sole arranger for the deal.

The bonds will protect subsidiaries of Assurant including American Security Insurance Co and American Bankers Insurance Co against some losses from U.S. hurricanes until April 2012.

Credit rating agency Standard & Poor's assigned preliminary ratings of BB and BB- on April 8 [nWNA1384].

According to S&P's pre-sales report, Goldman Sachs will also be total return swap (TRS) counterparty, contracted to ensure collateral backing the bonds is sufficient to meet interest and principal repayments or pay out to Assurant.

The last catastrophe bond issue, sold by German insurer Allianz (ALVG.DE: Quote, Profile, Research) earlier this month, eschewed the traditional TRS structure, its collateral being invested instead in debt of German government-guaranteed development bank KfW.