First time catastrophe bond sponsor St. Johns Insurance Company, the Florida and South Carolina focused homeowners carrier, looks likely to upsize its first Putnam Re Pte. Ltd. (Series 2021-1) cat bond transaction by 20% to $120 million.
St Johns Insurance also looks set to benefit from the high levels of demand for new cat bond issues from investors in terms of pricing as well, with the spread guidance having been narrowed and lowered towards the bottom-end.
The homeowner and condominium focused property insurance company is headquartered in Orlando, Florida and largely underwrites in the hurricane exposed US states of Florida and South Carolina.
St. Johns Insurance Company chose Singapore to domicile its first catastrophe bond, with special purpose reinsurance vehicle Putnam Re Pte. Ltd. registered there.
Putnam Re Pte. Ltd. will issue a single tranche of Series 2021-1 Class A notes which will provide reinsurance protection to St Johns Insurance through the sale of the notes to cat bond investors and the funds use as collateral.
St. Johns Insurance will get indemnity and per-occurrence reinsurance cover across a three-year term from the Putnam Re cat bond, protecting it against certain losses from named storms and hurricanes impacting Florida and South Carolina.
At launch, the deal was seeking just $100 million of protection for St Johns Insurance, across a layer of its reinsurance program attaching at $300 million and exhausting at $420 million, after accounting for FHCF and inuring coverage.
Unsurprisingly, given the strong investor appetite for cat bonds right now, the issuance has now been upsized to $120 million, we’re told, so set to cover the full layer of the reinsurance tower.
The now $120 million of Series 2021-1 Class A notes that Putnam Re Pte. Ltd. is going to issue have an initial expected loss of 1.36% and were first offered to investors with price guidance in a range from 5.5% to 6.25%.
The price guidance has now been updated and the range narrowed, at the lower level of 5.5% to 5.75%, sources said.
So it looks set to be a successful first cat bond sponsorship for St Johns Insurance, with an upsized transaction and pricing certain to come in below the initial guidance mid-point.