Selective returns for catastrophe bond renewal, with $300m High Point Re 2027-1

Selective Insurance Company is back in the catastrophe bond market for is second sponsorship, seeking $300 million or more in multi-peril collateralized reinsurance from a High Point Re Ltd. (Series 2027-1) issuance that will renew and expand coverage from its soon to mature first deal, sources have explained.

Selective Insurance, the US property and casualty insurer, had sponsored its debut catastrophe bond back in 2023, securing $300 million of protection from the High Point Re Ltd. (Series 2023-1) issuance. That cat bond cover matures at the end of this year.

That debut cat bond sponsorship, protected Selective Insurance against losses from multiple US perils, but excluded coverage for the states of California, Florida, Louisiana and Texas.

However, this new High Point Re 2027-1 cat bond will include coverage for all 50 US states and DC, we understand, showing Selective’s expansion and desire to benefit from reinsurance across all exposed regions.

So this new catastrophe bond targets both a renewal and an expansion of the capital markets backed coverage for the company, it appears.

High Point Re Ltd., a Bermuda based special purpose insurer (SPI), is targeting issuance of a single $300 million tranche of Series 2027-1 Class A notes, which will be sold to investors and the proceeds used to collateralize a multi-year and multi-peril reinsurance agreement with the sponsor Selective Insurance Company.

The cat bond notes that High Point Re Ltd. is offering are designed to provide Selective and subsidiaries with a four year source of reinsurance to the end of 2030, covering it against losses from U.S. named storms, earthquakes, severe thunderstorms, winter storms, wildfires, meteorite impacts and volcanic eruptions across the United States, we understand.

That reinsurance will provide its protection on an indemnity trigger and per-occurrence basis, sources said, with the targeted $300 million or greater tranche of Class A notes attaching their reinsurance protection from an $800 million loss and covering a share of losses up to $1.5 billion for Selective.

As a result, the High Point Re Series 2027-1 Class A cat bond notes will come with an initial attachment probability of 0.93%, an initial base expected loss of 0.6% and we are told they are being offered to investors with price guidance for a spread in a range from 2.75% to 3.25%.

We can compare that to the High Point Re 2023-1 cat bond, which was issued with an initial base expected loss of 0.77% and priced to pay investors a spread of 5.75%.

As a result, the multiple-at-market once again looks meaningfully lower with this new cat bond, given the much softer reinsurance market pricing conditions at this point in the cycle.

It’s encouraging to see Selective Insurance returning to renew its catastrophe bond protection. It will be interesting to see whether the company looks to upsize this deal, given the wide layer of its reinsurance tower that the notes will participate in.

You can read all about this new High Point Re Ltd. (Series 2027-1) catastrophe bond and every cat bond deal ever issued in our Artemis Deal Directory.