SafePoint Insurance Company has returned to the catastrophe bond market and is in search of $100 million in reinsurance protection from capital market investors through a Nature Coast Re Ltd. (Series 2025-1) issuance, which is the insurer’s first to focus on protection on an industry-loss index trigger basis, Artemis can report.
If successfully accomplished, this might be SafePoint’s seventh catastrophe bond issuance and its third under this Nature Coast Re program.
Nonetheless, we have now eight from the insurer listed in our Deal Directory, as a 2019 cat bond was not issued as traditional reinsurance was seen as more cost effective on the time.
SafePoint is understood to be a price sensitive and strategic buyer of reinsurance, which could explain the very fact that is the primary time the corporate has looked to sponsor a catastrophe bond with an industry-loss index trigger.
Typically, industry-index trigger cat bonds are the domain of reinsurers in search of retrocession. At times, index-triggers have been used on a county-weighted basis for primary carriers, to offer a special variety of reinsurance coverage, but we’re told that is state-weighted, so not a structure just like a CWIL transaction.
With this Series 2025-1 cat bond issuance from Nature Coast Re Ltd., SafePoint is again on the lookout for multi-year collateralized reinsurance protection for the named storm peril across the states of Florida, Louisiana, Alabama, Mississippi, and Texas.
In addition to SafePoint Insurance Company itself, the notes may also provide reinsurance to cover business underwritten by its reciprocal exchanges, the solely Louisiana focused entity Cajun Underwriters Reciprocal Exchange, and the Florida homeowner and business owner focused Manatee Insurance Exchange.
For this Series 2025-1 cat bond issuance, Nature Coast Re Ltd. is seeking to issue a single $100 million tranche of Class A notes that might be sold to investors and the proceeds used to collateralize a reinsurance agreement to learn the SafePoint ceding entities.
The notes will provide SafePoint and its two reciprocal underwriting entities with a roughly 4 12 months source of fully-collateralized reinsurance protection against named storm losses within the covered states.
This reinsurance protection might be structured on a state-weighted, annual aggregate and industry loss index trigger basis we’re told, running from settlement in early 2025 through to the top of 2028.
We understand that to ensure that events to qualify and aggregate towards the industry-index attachment point, there’s a franchise deductible that might be enforced of $40 million per-event.
The $100 million of Nature Coast Re 2025-1 Class A notes include an initial attachment probability of three.94%, an initial expected lack of 2.92% and are being offered to cat bond investors with spread price guidance in a spread from 9.5% to 10.25%, sources said.
This recent Nature Coast Re 2025-1 catastrophe bond is scheduled for settlement in early 2025, so once accomplished will change into the primary deal of the brand new 12 months and count towards 2025 annual cat bond issuance.
While use of an industry-loss trigger is interesting, because it implies a seek for reinsurance with a special form of responsiveness to an indemnity cover, which may be complementary for primary insurers programs, it does also suggest the sponsor could also be seeking to capitalise on cat bond market conditions.
Industry-loss trigger cat bonds have been executing at attractive pricing for sponsors, largely pricing below guidance in recent months.
As well as, as we discussed earlier this morning on this recent article, availability of and appetites for aggregate limit investment opportunities has recovered somewhat within the catastrophe bond market, so SafePoint could possibly be seeking to the capital markets to replenish some aggregate protection that may need diminished for the corporate lately because the reinsurance market hardened and appetites to support aggregate deals fell.
As we said, SafePoint is a strategic reinsurance buyer, so there’s every probability the corporate is seeking to each complement its indemnity coverage, while recognising that the cat bond market can provide well-priced aggregate limit on an index-trigger basis right now.
You possibly can read all about this recent Nature Coast Re Ltd. (Series 2025-1) catastrophe bond from Safepoint in addition to details on every other cat bond ever issued within the extensive Artemis Deal Directory.