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SafePoint Insurance Company has returned to the catastrophe bond market and is seeking $100 million in reinsurance protection from capital market investors through a Nature Coast Re Ltd. (Series 2025-1) issuance, which is the insurer’s first to target protection on an industry-loss index trigger basis, Artemis can report.
If successfully completed, this will be SafePoint’s seventh catastrophe bond issuance and its third under this Nature Coast Re program.
However, we have eight from the insurer listed in our Deal Directory, as a 2019 cat bond was not issued as traditional reinsurance was seen as more cost-effective at the time.
SafePoint is known to be a price sensitive and strategic buyer of reinsurance, which might explain the fact this is the first time the company has looked to sponsor a catastrophe bond with an industry-loss index trigger.
Typically, industry-index trigger cat bonds are the domain of reinsurers seeking retrocession. At times, index-triggers have been used on a county-weighted basis for primary carriers, to provide a different type of reinsurance coverage, but we’re told this is state-weighted, so not a structure similar to a CWIL transaction.
With this Series 2025-1 cat bond issuance from Nature Coast Re Ltd., SafePoint is again looking for multi-year collateralized reinsurance protection for the named storm peril across the states of Florida, Louisiana, Alabama, Mississippi, and Texas.
As well as SafePoint Insurance Company itself, the notes will also provide reinsurance to cover business underwritten by its reciprocal exchanges, the solely Louisiana focused entity Cajun Underwriters Reciprocal Exchange, and the Florida homeowner and business owner focused Manatee Insurance Exchange.
For this Series 2025-1 cat bond issuance, Nature Coast Re Ltd. is looking to issue a single $100 million tranche of Class A notes that will be sold to investors and the proceeds used to collateralize a reinsurance agreement to benefit the SafePoint ceding entities.
The notes will provide SafePoint and its two reciprocal underwriting entities with a roughly four year source of fully-collateralized reinsurance protection against named storm losses in the covered states.
This reinsurance protection will be structured on a state-weighted, annual aggregate and industry loss index trigger basis we are told, running from settlement in early 2025 through to the end of 2028.
We understand that in order for events to qualify and aggregate towards the industry-index attachment point, there is a franchise deductible that will be enforced of $40 million per-event.
The $100 million of Nature Coast Re 2025-1 Class A notes come with an initial attachment probability of 3.94%, an initial expected loss of 2.92% and are being offered to cat bond investors with spread price guidance in a range from 9.5% to 10.25%, sources said.
This new Nature Coast Re 2025-1 catastrophe bond is scheduled for settlement in early 2025, so once completed will become the first deal of the new year and count towards 2025 annual cat bond issuance.
While use of an industry-loss trigger is interesting, as it implies a search for reinsurance with a different kind of responsiveness to an indemnity cover, which can be complementary for primary insurers programs, it does also suggest the sponsor may be looking to capitalise on cat bond market conditions.
Industry-loss trigger cat bonds have been executing at attractive pricing for sponsors, largely pricing below guidance in recent months.
In addition, as we discussed earlier this morning in this new article, availability of and appetites for aggregate limit investment opportunities has recovered somewhat in the catastrophe bond market, so SafePoint could be looking to the capital markets to replenish some aggregate protection that might have diminished for the company in recent years as the reinsurance market hardened and appetites to support aggregate deals fell.
As we said, SafePoint is a strategic reinsurance buyer, so there is every chance the company is looking to both complement its indemnity coverage, while recognising that the cat bond market can provide well-priced aggregate limit on an index-trigger basis at this time.
You can read all about this new Nature Coast Re Ltd. (Series 2025-1) catastrophe bond from Safepoint as well as details on every other cat bond ever issued in the extensive Artemis Deal Directory.
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