Spinnaker targets debut catastrophe bond, $100m Mountain Re Ltd.

Spinnaker Insurance Company, a personal and commercial lines program and fronting specialist, has entered the catastrophe bond market for the first time, seeking $100 million or more in US multi-peril collateralized reinsurance from a Mountain Re Ltd. (Series 2023-1) issuance.

Spinnaker is very well-known for its work in underwriting and connecting risks with diverse sources of capital and in 2020 was acquired by fast-growing insurtech Hippo Insurance.

For its debut catastrophe bond, Spinnaker has established a Bermuda based issuance vehicle, Mountain Re Ltd., we’re told by sources.

Mountain Re Ltd. will look to issue a single Series 2023-1 tranche of Class A notes, that will be sold to investors and the proceeds used to collateralize a reinsurance agreement between the issuer and Spinnaker Insurance Company.

The target right now is for an issuance of $100 million in size or greater, we understand.

The notes will provide Spinnaker with a capital markets backed source of reinsurance against losses from a range of US perils, US named storm, quake, severe thunderstorm and winter storm.

We’re also told that the notes are most exposed to named storm risks, with Texas the largest concentration of exposure on an expected loss basis.

The Mountain Re 2023-1 catastrophe bond will cover Spinnaker Insurance with reinsurance on a per-occurrence and indemnity trigger basis over a three-year term, to June 5th 2026.

The notes would attach at $150 million in losses, covering a share of a layer up to $275 million, but we’re not sure of inuring reinsurance layers, as from the metrics it seems there must be some that effectively lift the attachment higher than that.

The Class A notes will have an initial attachment probability of 1.43%, an initial base expected loss of 0.86% and are being offered with spread price guidance in a range from 6% to 6.75%, it’s said.

It’s good to see yet another new sponsor in the catastrophe bond market this year, especially one as high-growth as Spinnaker and we suspect this cat bond ultimately also benefits Hippo’s reinsurance tower as well.

You can read all about this new Mountain Re Ltd. (Series 2023-1) catastrophe bond, and view details of more than 900 other cat bond issuances, in the extensive Artemis Deal Directory.