Slide secures debut cat bond at $100m, priced 2% above initial mid-point

Slide Insurance Company’s debut Purple Re Ltd. (Series 2023-1) catastrophe bond has now been finalised to provide it the targeted $100 million of named storm reinsurance protection, while the spread was fixed at just 2% above the mid-point of initial price guidance.

Slide Insurance Company, the full-stack homeowners property insurtech founded by former Heritage CEO Bruce Lucas, entered the catastrophe bond market last month seeking a debut $100 million Purple Re cat bond issuance to provide it with a capital markets source of named storm reinsurance protection.

Positively for the market, this cat bond has priced slightly higher than the initial mid-point of guidance, demonstrating that cat bond investors remain disciplined and have risk-adjusted return requirements that they still want to meet.

Purple Re Ltd. will now issue a $100 million Series 2023-1 Class A tranche of notes that will be sold to investors and the proceeds used as collateral to provide Slide with three-years of fully collateralized named storm reinsurance protection, covering the states of Florida and South Carolina, on an indemnity trigger and per-occurrence basis.

The single tranche of Class A notes being issued by Purple Re Ltd. remained at $100 million in size throughout this issuance.

The notes come with an initial base expected loss of 1.36% and were first offered to cat bond investors with spread pricing guidance in a range from 11.5% to 12.5%.

That price guidance was then narrowed and lifted towards the upper-end, with a new range offered of 12.25% to 12.5%, as we reported yesterday.

We’ve now learned from sources that the $100 million of Series 2023-1 Class A notes that Purple Re Ltd. will issue have been priced to pay investors a spread of 12.25% above the risk-free rate of the collateral investments.

So that is just 2% above the initial price guidance mid-point, which is still a strong result for a first-time cat bond sponsor, but also encouraging evidence that price still matters to investors and the market is not moving into a cycle where everything softens no matter the details of the risks featured.

Slide, with its founder Lucas having a history of utilising the catastrophe bond for reinsurance at his previous firm, could now make cat bond capacity a key feature of its growth, tapping the capital markets more as its portfolio builds, as an efficient way to source alternative reinsurance capacity from cat bond investors.

You can read all about this new Purple Re Ltd. (Series 2023-1) catastrophe bond and over 900 other cat bond transactions in our extensive Artemis Deal Directory.