US primary insurer Safepoint Insurance Company is the latest to seek to increase the size of a new catastrophe bond issue, with the aim of storm reinsurance protection named to the Nature Coast Re Ltd. (Series 2023-1) the issue was raised to between $165 million and $225 million, in our opinion.
Safepoint returned to the catastrophe bond market in Octoberwith a goal of securing at least $150 million in reinsurance protection from the capital markets, to protect against losses caused by the named storms affecting Florida and Louisiana.
This is the first cat bond since 2019 for Safepoint and it is therefore encouraging to learn that the insurer could increase the size of the transaction.
We are now told that Nature Coast Re’s catalytic bond issue could range from $165 million to $225 million, across the two tranches of notes issued.
The Nature Coast Re 2023-1 catastrophe bond will provide reinsurance to both Safepoint Insurance Company and its exclusively Louisiana-focused entity, Cajun Underwriters Reciprocal Exchange, providing protection against losses related to named storms in the states of Florida and Louisiana on a per event and per compensation trigger basis. , over a period of three years until November 30, 2026.
At launch, the two proposed note tranches were expected to reach $75 million.
Today we are told that it is likely that the lower risk tranche of notes will increase, while the higher risk tranche may struggle to reach the initial target size, but overall issuance is expected increase.
As it stands, we understand that the tranche of Class A notes, which is the low-risk layer with an expected initial loss of 0.93%, is valued at between $125 million and $150 million.
Class A notes had an initial spread of 9% to 10%, which we are now told was set at the upper limit of 10%.
Class B notes, which are riskier and have an expected initial loss of 1.60%, are now targeted between $40 million and their initial size of $75 million, from what we understand.
While Class B bonds initially had a forecast price spread of 11.5% to 12.5%, we now understand that this has been increased and set at 13.5%.
Here again, it is clear that investors demand a certain level of return, but also that a sponsor maximizes its opportunities throughout the issue and now seeks to obtain a significant amount of reassurance from the capital markets.
You can read everything about this news Nature Coast Re Ltd. (Series 2023-1) Safepoint catastrophe bond as well as details of every other catastrophe bond ever issued in the vast Directory of Artemis offers.