Selective targets first $200m High Point Re catastrophe bond

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Selective Insurance, the US property and casualty insurer, has entered the catastrophe bond market for the first time, seeking $200 million or more in multi-peril collateralized reinsurance from a High Point Re Ltd. (Series 2023-1) issuance.

This is the first catastrophe bond that US insurer Selective Insurance Company has sponsored, as the company turns to a fully securitized Rule 144a capital markets backed source of reinsurance.

The insurer is no stranger to collateralized reinsurance though, as we understand the company to have been a buyer as part of its reinsurance tower arrangements.

Now, Selective is seeking a $200 million catastrophe bond to add to its reinsurance arrangements, with High Point Re Ltd. recently registered in Bermuda to be the issuer of its debut cat bond deal.

For its Selective Insurance Company entity, the firm is seeking to sponsor the issuance of a single tranche of Series 2023-1 cat bond notes, to provide it with multi-year and multi-peril reinsurance protection.

The cat bond notes that High Point Re Ltd. will issue are designed to provide Selective with a three year source of reinsurance to the end of 2026, covering it against losses from U.S. named storms, earthquakes, severe thunderstorms, winter storms, wildfires, meteorite impacts and volcanic eruptions, we understand.

We’re told that the High Point Re cat bond covered area is across the United States, except for the key cat exposed states of California, Florida, Louisiana and Texas.

The coverage will be on an indemnity and per-occurrence basis, sources said, with the $200 million or greater tranche of Class A notes attaching their reinsurance protection from a $700 million loss and covering a share of losses up to $1.2 billion for Selective.

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This means the High Point Re Series 2023-1 Class A cat bond notes will come with an initial attachment probability of 1.13%, an initial base expected loss of 0.77% and we understand they are being offered to investors with spread price guidance in a range from 5% to 5.75%.

Despite this cat bond excluding the key wind exposed states of Florida, Louisiana and Texas, we are told that named storms contribute the majority, over 90%, of the expected loss to the notes.

Selective is just the latest new sponsor to the cat bond market and as a significant buyer of catastrophe reinsurance protection, it is encouraging that this first High Point Re cat bond could become a key component of the insurers protection going forwards.

You can read all about this new High Point Re Ltd. (Series 2023-1) catastrophe bond and every cat bond deal ever issued in our Artemis Deal Directory.

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