Gallatin Point sticks with $150m target for debut Marlon cat bond as prices rise

Private investment firm Gallatin Point Capital LLC is persisting with a $150 million target for Florida hurricane protection from its debut Marlon Ltd. (Series 2024-1) catastrophe bond issuance, but the pricing has been raised for both of the tranches of notes on offer, Artemis has learned.

Gallatin Point is a private equity and financial services focused investment firm withe numerous investments into insurance and reinsurance companies, re/insurance distribution plays such as MGA/MGU’s, reinsurance sidecars and insurtechs.

In launching its first catastrophe bond to investors a few weeks ago, Gallatin Point Capital LLC was looking to build relationships with insurance-linked securities (ILS) investors and secure a capital markets backed source of reinsurance protection to offset some of the Florida named storm and hurricane exposure in its portfolio of re/insurance sector investments.

Now, we’ve been told by sources that the size of this debut Marlon Ltd. 2024-1 cat bond for Gallatin Point is unchanged, with still a $150 million issuance on the cards.

But the pricing has risen, we understand, with this debut Gallatin Point cat bond feeling the effects of the spread widening that has been seen in catastrophe bonds, as investors demand higher prices.

Marlon Ltd. remains on track to issue two tranches of Series 2024-1 notes, to secure $150 million of Florida named storm reinsurance for Gallatin Point investment affiliate GPC Partners Investments Corp (Coppola) LP, to run across a three year term to the start of June 2027.

The Class A tranche of notes remains at $100 million in size, to provide per-occurrence coverage, on an industry loss index trigger basis.

With their initial expected loss of 0.65%, the Class A notes were first offered to investors with price guidance of 5.25% to 6%, but we’re now told this has risen to 7%, a roughly 24% increase from the initial guidance mid-point.

The Class B tranche of notes remains $50 million in size, to provide both industry-loss based per-occurrence and also multi-event capped aggregate cover as well.

The Class B notes come with an initial expected loss of 0.92% and were first offered to investors with price guidance in a range from 9.75 to 10.5%, but we’re told the price here has also risen, by roughly 9%, to now be offered with an 11% spread.

So both tranches of notes have seen their pricing rise above guidance, typical of cat bond deals in the market right now, as investors make their appetite for higher and risk commensurate returns clear.

But it’s good to see Gallatin Point continuing to pursue its first catastrophe bond cover, which will demonstrate one way that investment managers and allocators can carve catastrophe risk exposure out of their portfolios using an insurance-linked securities (ILS) structure.

You can read all about this Marlon Ltd. (Series 2024-1) catastrophe bond and more than 1,000 other cat bond transactions in the extensive Artemis Deal Directory.