Spinnaker Insurance Company, the personal and commercial lines program and fronting specialist, is progressing its debut catastrophe bond issuance and the target size for the market for Mountain Re Ltd. (Series 2023-1) issuance has increased slightly to $125 million, we’re told.
At the same time, Spinnaker, the fronting company owned by fast-growing insurtech Hippo Insurance, looks set to achieve pricing of the cat bond within the initial guidance, albeit at the upper-end of the range offered to investors.
Spinnaker entered the catastrophe bond market for the first time with this debut Mountain Re issuance towards the end of April, seeking $100 million or more in US multi-peril collateralized reinsurance from the capital markets deal.
The target size has been lifted, with an issuance of up to $125 million now anticipated, we understand.
The notes will provide Spinnaker with a capital markets backed source of reinsurance against losses from a range of US perils, US named storm, quake, severe thunderstorm and winter storm, on on a per-occurrence and indemnity trigger basis over a three-year term, to June 5th 2026.
The Series 2023-1 Class A cat bond notes that Mountain Re Ltd. will issue have an initial base expected loss of 0.86% and were first offered with spread price guidance in a range from 6% to 6.75%, but we’re now told that the price guidance has been fixed at the top-end of 6.75%.
Once again, for a debut cat bond sponsor to price its notes within initial guidance can still be considered a strong result, even when they price at the upper-end. Underscoring the health of the execution is the chance the issuance upsizes to $125 million as well.
The proposed issuance data has slipped a week, as was seen with the NZ EQC sponsored Totara Re cat bond. But with both being from debut sponsors hitting the market at a very busy time, when there are a lot of issuances being marketed, it is not surprising investors take a little longer to get comfortable with these deals, given the additional time typically taken to understand a new sponsors offering.