Safepoint’s Manatee 2016-1 cat bond matures, $20m loss realised

Safepoint Insurance Company’s 2016 Manatee Re catastrophe bond has been matured, which we’re told allowed the $20 million reinsurance recovery to be made so investors could realise their losses from the hurricane Irma impacted Manatee Re 2016-1 Class C notes.

Almost immediately after hurricane Irma struck Florida in September 2017 it became clear that Safepoint’s Manatee Re Ltd. (Series 2016-1) catastrophe bond was identified as one that was likely to face losses from the storm.

Sponsor Safepoint quickly filed an event notice that disclosed a $100 million initial estimate of the insurer’s hurricane Irma losses, which alone would have been sufficient to erode the highest risk $20 million Class C tranche of Manatee Re 2016-1 cat bond notes.

The market quickly marked down the Manatee Re 2016-1 Class C notes as a total loss on secondary cat bond pricing sheets, and that’s where this tranche of notes stayed marked down to for the next 17 months.

No extension of the maturity date was seemingly required, as we understand Safepoint’s estimate of losses had risen a little, so continuing to confirm that this tranche of notes was a loss and investors collateral would be collected by Safepoint as a reinsurance recovery.

While Safepoint’s estimate of losses from hurricane Irma rose, no surprise given the evident loss creep issues seen across the Floridian insurance and reinsurance market, we understand they never came close to the attachment point for the $75 million of Class A notes from this issuance.

Now, both tranches of notes have been matured, which we’re told allowed the reinsurance recovery from the $20 million Class C tranche to finally be realised by both sides, sponsor and investors.

It is possible that a loss payment may have been made prior to the maturity date, sometimes this is allowable under cat bond terms if agreed by all sides and given the notes were so clearly a total loss and a reinsurance recovery warranted, it could have happened in the case of Manatee Re 2016.

The news of this tranche of the Manatee Re 2016 catastrophe bond paying out comes soon after it became apparent that the first of the Citrus Re cat bonds began to pay out for insurer Heritage. Other payouts are expected over the coming weeks and months.

For ILS and cat bond investors, once these reinsurance recoveries begin it can allow them to realise losses from Irma and other catastrophes, while the sponsors benefit from the collateral being transferred to their benefit.

You can read all about the Manatee Re Ltd. (Series 2016-1) catastrophe bond and every other transaction in the Artemis Deal Directory.

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