U.S. primary insurer Safepoint Insurance Company has now priced its latest catastrophe bond issue, with the Nature Coast Re Ltd. (Series 2023-1) issuance now fixed to provide the company $195 million in named storm reinsurance protection.
Safepoint came back to the catastrophe bond market in October, with a target to secure at least $150 million of reinsurance protection from the capital markets, to protect it against losses from named storms affecting Florida and Louisiana and covering its Cajun reciprocal exchange entity as well.
As we then reported, the Nature Coast Re cat bond issuance was set to upsize, while its pricing rose, and could have been anywhere from $165 million to as much as $225 million in size, across the two tranches of notes being issued.
Now, we’re told that the deal will settle to provide Safepoint $195 million of named storm and hurricane reinsurance, while the pricing for each tranche of notes remained at the elevated levels.
The now $195 million Nature Coast Re 2023-1 cat bond issuance will protect both Safepoint Insurance Company and its solely Louisiana focused entity Cajun Underwriters Reciprocal Exchange, providing reinsurance protection against named storm losses in the states of Florida and Louisiana on a per-occurrence and indemnity trigger basis, across a three-year term to November 30th 2026.
Originally, both tranches of notes on offer were targeted to be $75 million in size.
The Class A tranche of notes, which are the lower-risk layer with an initial expected loss of 0.93%, were subsequently pitched to investors at between $125 million and $150 million in size and we’re now told have achieved that upper-end target, so will settle at $150 million.
The Class A notes had initial spread price guidance of 9% to 10%, which has now been fixed at the upper-end of 10%, we’re told.
The Class B notes, which are riskier with an initial expected loss of 1.60%, saw their size target adjusted and lowered to between $40 million and their original $75 million size, but we’re now told are going to settle at $45 million for Safepoint.
The Class B notes initially had spread price guidance of 11.5% to 12.5%, but the spread has now been fixed at the elevated level of 13.5% for this riskier tranche, sources said.
It’s good to see Safepoint securing more than the originally targeted reinsurance and the fact the lower-risk layer of notes upsized reflects the appetite of cat bond investors to fill out more of the upper-layers of reinsurance towers efficiently for US catastrophe exposed insurers.
This is now the sixth catastrophe bond from Safepoint that we have listed in our Deal Directory.