Nature Coast Re Ltd. (Series 2025-1)

US primary insurer SafePoint is back in the catastrophe bond market and seeking to sponsor what will be its third under the Nature Coast Re structure and its seventh cat bond sponsorship if successfully completed.

For the first time though, SafePoint is sponsoring a cat bond with an industry-loss index trigger, as the company looks for reinsurance coverage on different terms and with a different kind of responsiveness, but potentially also looks to capitalise on recent market pricing trends.

With this Series 2025-1 cat bond issuance from Nature Coast Re Ltd., SafePoint is again looking for multi-year collateralized reinsurance protection for the named storm peril across the states of Florida, Louisiana, Alabama, Mississippi, and Texas.

As well as SafePoint Insurance Company itself, the notes will also provide reinsurance to cover business underwritten by its reciprocal exchanges, the solely Louisiana focused entity Cajun Underwriters Reciprocal Exchange, and the Florida homeowner and business owner focused Manatee Insurance Exchange.

For this Series 2025-1 cat bond issuance, Nature Coast Re Ltd. is looking to issue a single $100 million tranche of Class A notes that will be sold to investors and the proceeds used to collateralize a reinsurance agreement to benefit the SafePoint ceding entities.

The notes will provide SafePoint and its two reciprocal underwriting entities with a roughly four year source of fully-collateralized reinsurance protection against named storm losses in the covered states.

This reinsurance protection will be structured on a state-weighted, annual aggregate and industry loss index trigger basis we are told, running from settlement in early 2025 through to the end of 2028.

We understand that in order for events to qualify and aggregate towards the industry-index attachment point, there is a franchise deductible that will be enforced of $40 million per-event.

The $100 million of Nature Coast Re 2025-1 Class A notes come with an initial attachment probability of 3.94%, an initial expected loss of 2.92% and are being offered to cat bond investors with spread price guidance in a range from 9.5% to 10.25%, sources said.

This new Nature Coast Re 2025-1 catastrophe bond is scheduled for settlement in early 2025, so once completed will become the first deal of the new year and count towards 2025 annual cat bond issuance.

Update 1:

We’re told that SafePoint has increased its target for this new Nature Coast Re 2025-1 catastrophe bond to provide between $150 million and as much as $200 million of reinsurance protection.

At the same time, the price guidance for the risk interest spread has been narrowed to an updated range of 9.75% to 10%.

Update 2:

SafePoint eventually secured the upsized target for this new catastrophe bond, with the Nature Coast Re 2025-1 set to provide it and its reciprocal exchanges $200 million of industry-loss triggered US named storm reinsurance protection.

The notes were priced to pay investors a risk interest spread of 9.75%, so at the low-end of the revised and narrowed guidance, which was within the lower-half of the initially marketed range.