Swiss Re Insurance-Linked Fund Management

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Putnam Re Pte. Ltd. (Series 2021-1)

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Putnam Re Pte. Ltd. (Series 2021-1) – At a glance:

  • Issuer: Putnam Re Pte. Ltd.
  • Cedent / sponsor: St. Johns Insurance Company
  • Placement / structuring agent/s: GC Securities is sole structuring agent and bookrunner
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: Florida and South Carolina named storms
  • Size: $120m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: May 2021

Putnam Re Pte. Ltd. (Series 2021-1) – Full details:

This is the first catastrophe bond transaction from a new sponsor to the market, St. Johns Insurance Company, a homeowner and condo property insurer focused on the US states of Florida and South Carolina and based in Orlando.

St. Johns Insurance Company has elected to use Singapore as thee issuance domicile for its first catastrophe bond, registering special purpose reinsurance vehicle Putnam Re Pte. Ltd. there for this currently $100 million Series 2021-1 issuance.

Putnam Re Pte. Ltd. will look to issue a single tranche of Series 2021-1 Class A notes, that is currently sized to provide $100 million of reinsurance protection to St Johns Insurance through the sale of the notes to cat bond investors and the funds use as collateral.

The reinsurance protection that St. Johns Insurance will benefit from with this deal will provide it with indemnity and per-occurrence cover across a three-year term, against certain losses from named storms and hurricanes impacting Florida and South Carolina.

As with many cat bonds for first time sponsors that have a desire to expand their business, we understand the covered area can be expanded on reset to include additional states, should the sponsor become active there.

Sources said the $100 million of notes will attach at $300 million of qualifying losses to St. Johns Insurance and the coverage would be exhausted at $420 million in losses, after accounting for FHCF and inuring coverage, giving a little room for the deal to upsize to fill this reinsurance layer.

The currently $100 million of Series 2021-1 Class A notes that Putnam Re Pte. Ltd. will issue have an initial expected loss of 1.36% and we understand are being offered to investors with price guidance in a range from 5.5% to 6.25%.

Update 1:

St Johns Insurance elected to upsize its first catastrophe bond deal, with the Putnam Re issuance growing 20% to $120 million, meaning it will fill the covered layer of its reinsurance tower.

At the same time price guidance for the notes dropped and was narrowed, to 5.5% to 5.75%.

Update 2:

St Johns Insurance eventually secured its first catastrophe bond issuance at the upsized by 20% $120 million, while pricing was fixed at the bottom-end of initial guidance, at 5.5%.

Update – May 2022:

The Putnam Re Pte. Ltd. catastrophe bond defaulted and was redeemed early, after sponsor St. Johns Insurance failed and went into liquidation. A premium payment was missed which defaulted the notes and we understand investors received back slightly less than the full principal due to certain costs that fell to them.

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