PURE targets debut $100m Ashera Re catastrophe bond

PURE, a high-net worth insurance specialist that is part of the Tokio Marine Group, has entered the catastrophe bond market for the first time, seeking $100 million or more in named storm and earthquake reinsurance from an Ashera Re Ltd. (Series 2024-1) issuance, Artemis has learned.

For its debut catastrophe bond issuance, PURE is seeking capital markets backed and fully-collateralized reinsurance to protect the portfolios of its Privilege Underwriters Reciprocal Exchange (PURE), which is Florida domiciled, and PURE Specialty Exchange, which is an Arizona-domiciled Domestic Surplus Lines insurer, while other underwriting entities could in future benefit from the cat bond coverage as well, should PURE elect to include them.

PURE has established Ashera Re Ltd. in Bermuda as a vehicle for the issuance of series of catastrophe bond notes, with this first Series 2024-1 issuance targeted as $100 million or greater in size, we understand.

The coverage sought is reinsurance against losses from named storms and earthquakes affecting the US and Canada, with protection to be provided on an indemnity trigger and per-occurrence basis, across a three-year term running from April 1st.

Sources said that this first Ashera Re catastrophe bond will provide PURE with reinsurance for a portfolio of its personal property insurance business lines, which includes high value homes, motor, art and collectibles, and personal boat policies.

The geographic spread of this business is significant, as while PURE had begun as a Florida focused reciprocal, it has expanded rapidly to offer insurance across the US and in Canada.

We understand the largest exposures, in expected loss terms, are northeast and Florida named storm or hurricane events, while California presents the largest earthquake risk to these cat bond notes.

The currently $100 million of Series 2024-1 Class A notes that Ashera Re Ltd. is offering would attach their reinsurance coverage at $1 billion of losses, protecting PURE across a share of its losses up to $1.6 billion, we are told.

As a result, the Class A notes come with an initial base attachment probability of 2.47%, an initial base expected loss of 1.68% and are being offered to cat bond investors with spread price guidance in a range from 5.25% to 5.75%.

We’re told the notes are also being offered with sensitivity risk metrics, which would put the expected loss lower at 1.17%.

It’s encouraging to see yet another first time catastrophe bond sponsor enter the market in 2024 and given the execution being achieved on recent deals, PURE could find the cat bond market an efficient reinsurance alternative for its program.

You can read all about this new Ashera Re Ltd. (Series 2024-1) catastrophe bond and every cat bond deal in the Artemis Deal Directory.