New entrant to the catastrophe bond market St. Johns Insurance Company, a Florida and South Carolina focused homeowners carrier, has now secured the upsized $120 million of reinsurance target for its first Putnam Re Pte. Ltd. (Series 2021-1) cat bond.
At the same time, St Johns Insurance has benefited from high levels of investor demand for new cat bond issues, with coupon pricing now finalised at the bottom-end of initial spread guidance.
The property insurance company is headquartered in Orlando, Florida and largely underwrites largely homeowner and condominium business in the hurricane exposed US states of Florida and South Carolina.
St. Johns Insurance Company has used Singapore as the domicile its first catastrophe bond, with special purpose reinsurance vehicle Putnam Re Pte. Ltd. registered for this issue.
Putnam Re Pte. Ltd. will sell to cat bond investors a single now upszied $120 million tranche of Series 2021-1 Class A notes which will provide reinsurance protection to St Johns Insurance with the proceeds used as collateral.
The Putnam Re cat bond will provide the insurer with indemnity and per-occurrence reinsurance protection across a three-year term from, protecting it against certain losses from named storms and hurricanes impacting Florida and South Carolina.
At launch, the deal was targeted as a $100 million issuance, to cover the sponsor across a layer of its reinsurance program attaching at $300 million and exhausting at $420 million, after accounting for FHCF and inuring coverage.
The issuance was successfully upsized to $120 million, so will now fill the full layer of St. Johns reinsurance tower.
The $120 million of Series 2021-1 Class A notes that Putnam Re Pte. Ltd. will 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 was updated and the range narrowed last week, to a revised 5.5% to 5.75%.
Now, having priced on Friday, the notes coupon has been fixed at the lowest-end of guidance, at 5.5%, we’re told.
As a result, for St Johns Insurance, this is a very successful first cat bond sponsorship, with the issuance upsized by 20% and pricing falling by roughly 6% to the bottom-end of guidance.