Slide Insurance Company’s debut Purple Re Ltd. (Series 2023-1) catastrophe bond has now been finalised to provide it the targeted $100 million of named storm reinsurance protection, while the spread was fixed at just 2% above the mid-point of initial price guidance.
Slide Insurance Company, the full-stack homeowners property insurtech founded by former Heritage CEO Bruce Lucas, entered the catastrophe bond market last month seeking a debut $100 million Purple Re cat bond issuance to provide it with a capital markets source of named storm reinsurance protection.
Positively for the market, this cat bond has priced slightly higher than the initial mid-point of guidance, demonstrating that cat bond investors remain disciplined and have risk-adjusted return requirements that they still want to meet.
Purple Re Ltd. will now issue a $100 million Series 2023-1 Class A tranche of notes that will be sold to investors and the proceeds used as collateral to provide Slide with three-years of fully collateralized named storm reinsurance protection, covering the states of Florida and South Carolina, on an indemnity trigger and per-occurrence basis.
The single tranche of Class A notes being issued by Purple Re Ltd. remained at $100 million in size throughout this issuance.
The notes come with an initial base expected loss of 1.36% and were first offered to cat bond investors with spread pricing guidance in a range from 11.5% to 12.5%.
That price guidance was then narrowed and lifted towards the upper-end, with a new range offered of 12.25% to 12.5%, as we reported yesterday.
We’ve now learned from sources that the $100 million of Series 2023-1 Class A notes that Purple Re Ltd. will issue have been priced to pay investors a spread of 12.25% above the risk-free rate of the collateral investments.
So that is just 2% above the initial price guidance mid-point, which is still a strong result for a first-time cat bond sponsor, but also encouraging evidence that price still matters to investors and the market is not moving into a cycle where everything softens no matter the details of the risks featured.
Slide, with its founder Lucas having a history of utilising the catastrophe bond for reinsurance at his previous firm, could now make cat bond capacity a key feature of its growth, tapping the capital markets more as its portfolio builds, as an efficient way to source alternative reinsurance capacity from cat bond investors.