Artemis has learned that Sutton National Group is now aiming to secure an upsized $100 million in fire reinsurance protection for California via its debut Greengrove Re Ltd. (Series 2025-1) catastrophe bond issuance.
Sutton National Group launched its debut appearance in the cat bond market earlier this month, seeking to secure $75 million or more in fire reinsurance protection in California from the Greengrove Re 2025-1 deal.
Now, Artemis has learned that the target size of this Greengrove Re cat bond has increased by 33% to $100 million in response to investor demand, while the spread guidance has narrowed towards the upper-end of initial guidance.
With this upsized target, Greengrove Re Ltd. is looking to issue $100 million of notes that are designed to provide ceding entities Sutton National Insurance Company and Sutton Specialty Insurance Company with a three-year source of indemnity and per-occurrence based reinsurance running from April 1st this year.
As we previously said, what’s most interesting is that the covered region and perils for this catastrophe bond are set to be California and wildfires as well as any fires following earthquake events. However, we understand that other states can be added to the coverage after a reset, should the sponsor so choose.
The now $100 million of Series 2025-1 Class A notes come with an initial attachment probability of 2.1%, an initial expected loss of 1.44% and were originally being offered to cat bond investors with price guidance in a range from 7.5% to 8%.
We’re now told by sources that the spread guidance has been updated at a slightly higher level, with 7.75% to 8% now being offered, so the upper-end of initial guidance.
There is also a sensitivity case expected loss, which takes into account wildfire subrogation potential and that models out the EL to a lower 1%.
So, it appears that Sutton National Group could be heading for a strong execution of its first ever catastrophe bond, in terms of achieving more reinsurance coverage than initially targeted, which for a first-time sponsor would be an encouraging outcome while also indicating that, despite the recent loss activity, wildfire risk remains a peril that the cat bond market will consider as an investment opportunity.
As a reminder, you can read all about this new Greengrove Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond ever issued in the extensive Artemis Deal Directory.
