U.S. primary insurer Safepoint is set to issue a new catastrophe bond in Singapore, as a $75 million Manatee Re III Pte. Ltd. (Series 2019-1) transaction launches to the market.
This will be among the first full 144a catastrophe bond to be issued in Singapore under its new insurance-linked securities (ILS) regulatory regime, following on from the Orchard ILS Pte Ltd deal sponsored by IAG, which was the first ILS or collateralised reinsurance arrangement in the country.
Sources said that Safepoint has elected to domicile its latest cat bond issuance vehicle in Singapore, to take advantage of the new regulation and available grant funding.
Manatee Re III Pte. Ltd. has been established as a special purpose reinsurance vehicle registered in Singapore for this transaction.
The SPRV will seek to issue a single tranche of Series 2019-1 cat bond notes, that will be sold to investors to provide Safepoint with a source of collateralised reinsurance capacity.
We’re told the Manatee Re III cat bond issuance is targeting at least $75 million of reinsurance protection for sponsor Safepoint, with two tranches of notes set to be sold to provide the collateral to underpin the reinsurance contracts.
The Manatee Re III Pte. 2019 cat bond will provide sponsor Safepoint with a source of indemnity based reinsurance across a three-year term, providing cascading and per-occurrence coverage against losses from named storms and severe thunderstorms in Florida, Louisiana, New Jersey & Texas.
We’re told the cat bond coverage area could be expanded, should Safepoint grow into further U.S. states during the period of coverage, so providing flexible reinsurance that can support the companies ongoing expansion and growth.
Manatee Re III Pte. Ltd. is going to issue two tranches of notes, both of which are exposed to the perils above but at different risk levels.
A currently $50 million tranche of Series 2019-1 Class A notes will have an initial attachment point of $27 million and cover a layer right up to $377 million, we understand, with an initial expected loss of 1.15%. This tranche is to be offered to investors with pricing guidance of 4.5% to 5%.
A $25 million tranche of Series 2019-1 Class B notes will have an initial attachment also at $27 million, covering a layer up to $107 million, with an initial expected loss of 4.23%, so sitting below the Class A notes and being more risky as a result. This tranche has price guidance of 8.75% to 9.25%, we’re told.
We understand that Safepoint will seek as much capital markets reinsurance protection as it can secure with this new cat bond, filling the rest of these layers with other traditional or collateralised sources of reinsurance as is necessary following the execution of this transaction.
Each tranche will sit alongside Safepoint’s 2018 Manatee Re II Ltd. catastrophe bond.
It’s encouraging for Singapore that it will see another catastrophe bond already this year, as it demonstrates that the regulation is appropriate and that the grant program is having the desired effect of attracting sponsors.
We’ll update you as this new Manatee Re III Pte. Ltd. (Series 2019-1) catastrophe bond from Safepoint comes to market and you can read all about this and every other cat bond deal in the Artemis Deal Directory.
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