Safepoint seeks $150m Nature Coast Re named storm catastrophe bond
U.S. primary insurer Safepoint Insurance Company has returned to the catastrophe bond market seeking at least $150 million of named storm reinsurance protection from a Nature Coast Re Ltd. (Series 2023-1) issuance.
If successful it will be the first catastrophe bond issuance sponsored by Safepoint since 2019, having failed to get a 2022 Manatee transaction away.
Now, with a new Bermuda based issuance vehicle called Nature Coast Re Ltd. established, Safepoint is back and targeting at least $150 million of reinsurance protection from the capital markets, to cover certain losses from named storms affecting Florida and Louisiana.
Nature Coast Re will issue two tranches of Series 2023-1 notes that will be sold to insurance-linked securities (ILS) funds and investors and the proceeds be used to collateralize reinsurance agreements between the issuer and Safepoint entities.
This Nature Coast Re 2023-1 cat bond will provide reinsurance to both Safepoint Insurance Company and its solely Louisiana focused entity Cajun Underwriters Reciprocal Exchange, we understand.
We’re told the cat bond will cover the insurer for named storm losses in the states of Florida and Louisiana on a per-occurrence and indemnity trigger basis, across a three-year term to November 30th 2026.
Both tranches of notes are currently targeted at $75 million in size, we understand, but there is room for each to upsize if issuance and pricing were conducive to do so.
A Class A tranche of notes cover a $200 million layer, attaching at $375m in Florida and $800m in Louisiana, while the exhaustion point would be $575m in Florida and $1bn in Louisiana, we are told.
That gives the Class A notes an initial attachment probability of 1.18%, an initial expected loss of 0.93% and the spread price guidance is from 9% to 10%.
The Class B notes also cover a $200 million layer but are riskier, attaching at $175m in Florida and $600m in Louisiana, while the exhaustion point would be $375m in Florida and $800m in Louisiana, so the B’s sit directly beneath the A’s in Safepoint’s reinsurance tower.
As a result, the Class B notes have an initial attachment probability of 2.33%, an initial expected loss of 1.60% and their spread price guidance is from 11.5% to 12.5%, sources said.
It’s encouraging to Safepoint back in the catastrophe bond market and looking to buy reinsurance from ILS investors to occupy a share of a relatively significant $400 million layer of each of its Florida and Louisiana reinsurance towers.
It suggests Safepoint believes pricing in the cat bond market to be competitive right now and so it will be interesting to watch how these deals proceed to market, not least given the failed issuance in 2022.
You can read all about this new Nature Coast Re Ltd. (Series 2023-1) catastrophe bond from Safepoint as well as details on every other cat bond ever issued in the extensive Artemis Deal Directory.
