Purple Re Ltd. (Series 2024-1)

This will be the third catastrophe bond to be sponsored by Slide Insurance Company, the full-stack homeowners property insurtech writer, as the company looks to increase the participation of the capital markets in its named storm and hurricane reinsurance arrangements.

This already looks set to be the biggest cat bond sponsored by Slide, as its debut cat bond from April 2023 was a $100 million Purple Re Ltd. (Series 2023-1), which it followed up by sponsoring an also $100 million Purple Re Ltd. (Series 2023-2) in July 2023.

For its third cat bond, Slide is looking to bring even more capital markets backed protection into its reinsurance tower, with an initial target of $150 million for this Purple Re 2024-1 deal.

Slide has been expanding its portfolio of homeowners property risk in hurricane exposed states, so needs an increasingly large reinsurance tower to support that exposure growth.

Bermuda based special purpose insurer (SPI) Purple Re Ltd. will look to issue a single tranche of Series 2024-1 Class A notes, that will be sold to investors to collateralize the reinsurance agreement with Slide.

The reinsurance will protect Slide over a three-year term from June 1st this year to the end of May 2027, we are told, while the covered peril is again named storm risks and the covered area the same as the previous Purple Re cat bonds, being Florida and South Carolina to begin.

The $150 million of notes to be issued will provide Slide with fully-collateralized named storm reinsurance on an indemnity and per-occurrence basis.

The Class A notes would attach their coverage at $505 million of losses to Slide, covering a share of losses to $805 million, but we understand they inure to reinsurance and FHCF coverage beneath, so the effective attachment point could be as high as $1.42 billion of loss to Slide.

With that, these 2024-1 Purple Re cat bond notes will sit above the two series of notes issued in 2023, we are told.

The $150 million of Class A notes come with an initial attachment point of 1.23%, an initial base expected loss of 1.06% and are being offered to cat bond investors with spread price guidance ranging from 8.75% to 9.5%, sources said.

Update 1:

We’re now told that the target size has been raised by 40% to $210 million, which will make this Slide’s largest cat bond to-date.

The price guidance for the now $210 million of notes to be issued has been lowered to 8.75% to 9%, so within guidance but narrowed towards the low-end.

Update 2:

We’ve learned that Slide has secured the upsized $210 million target for reinsurance from its latest Purple Re 2024-1 catastrophe bond deal, while the notes were eventually priced to pay investors a spread of 9%, so in the lower-half of initial guidance.