U.S. primary insurer Safepoint Insurance Company has returned to the catastrophe bond market in search of $125 million or more in named storm reinsurance protection across its key US states, with a Manatee Re II Ltd. (Series 2022-1) cat bond for which it has returned to Bermuda to issue.
This will be the fifth catastrophe bond to use the Manatee Re name for Safepoint and after its last was issued in Singapore, the insurer has returned to its last used Bermuda SPI for this issuance.
Safepoint has benefited from the reinsurance protection its catastrophe bonds have provided in the past, with Manatee deals triggered by both hurricane Irma in 2017 and hurricane Ida in 2021, so it’s good to see the insurer persisting with its use of cat bonds as part of its reinsurance tower.
For 2022, sources explained that Safepoint’s Bermuda domiciled special purpose insurer Manatee Re II Ltd. will seek to issue two tranches of Series 2022-1 cat bond notes, for total coverage of $125 million or perhaps more, and the notes are set to be sold to investors to collateralize two reinsurance agreements between the SPI and Safepoint Insurance Company.
The reinsurance agreements will provide Safepoint with a almost three years of collateralized reinsurance protection, beginning June 1st this year and running to April 2025.
The protection this Manatee Re II 2022-1 catastrophe bond will provide Safepoint will cover it against losses from US named storms, so tropical storms and hurricanes, initially across its core states of Alabama, Florida, Louisiana, Mississippi, New Jersey and Texas.
The protection will be afforded through an indemnity trigger for both tranches of notes, with coverage on a per-occurrence basis.
Manatee Re II Ltd. will issue a currently $75 million Class A tranche of notes that have a minimum attachment level of $240 million of losses, an initial attachment probability of 1.33%, initial expected loss of 0.96% and are being offered to cat bond investors with price guidance in a range from 5.75% to 6.5%, we’re told.
A currently $50 million Class B tranche of notes that Manatee Re II will issue have a minimum attachment level of $150 million, an initial attachment probability of 2.75%, initial expected loss of 1.77% and are being marketed with coupon guidance in a range from 7.75% to 8.25%, we understand.
This is the second pure US wind catastrophe bond to launch to the market in recent days and like the Hestia Re Ltd. cat bond from insurtech Kin, the multiples offered by this new Manatee Re cat bond are relatively high.
Typically, cat bonds targeting US wind coverage well in advance of the June and July reinsurance renewal season will hope to gain better market execution than they would if issued near the renewals.
So these cat bonds may provide some guidance for where to expect US wind focused reinsurance pricing to land at the mid-year renewals, which is certainly looking to be a shade higher than the prior year.
We’ll update you as these latest cat bonds come to market.