Sutton seeks CA wildfire cover with $75m Greengrove Re 2025-1 catastrophe bond

Sutton National Group has entered the catastrophe bond market for the first time and intriguingly is seeking a capital markets backed $75 million or larger source of fire reinsurance protection in California from this debut Greengrove Re Ltd. (Series 2025-1) issuance, we have learned.

Sutton National Group underwrites through its Sutton National Insurance Company and E&S carrier Sutton Specialty Insurance Company, often in partnership with MGA’s on a program basis.

In this case program administrator Bamboo Ide8 Insurance Services, LLC produces the subject business for Sutton National Group’s underwriting entities, with Bamboo the sole producer for Sutton’s admitted homeowners’ business in California, we are told.

Greengrove Re Ltd. has been established in Bermuda for the issuance of series of catastrophe bond notes and a single Series 2025-1 tranche of Class A notes is being offered to investors in this case.

The currently $75 million of Greengrove Re Series 2025-1 Class A notes 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, sources said.

But most interestingly the covered region and perils for this catastrophe bond are set to be California and wildfires as well as fires following earthquake events. We understand other states can be added to the coverage after a reset, should the sponsor so choose.

Given the recency of the Los Angeles wildfire event in January 2025, it is going to be intriguing to see how cat bond investors respond to what is a rare opportunity, given wildfire risks do not feature in the catastrophe bond market very frequently at this time.

We understand that the reinsurance protection from these Greengrove Re 2025-1 cat bond notes would attach at $150 million of losses and exhaust their coverage at $250 million, leaving some room for the $75 million issuance to upsize should their prove to be appetite from investors for the peril.

The $75 million of Class A notes come with an initial attachment probability of 2.1%, an initial expected loss of 1.44% and are being offered to cat bond investors with price guidance in a range from 7.5% to 8%.

We’re told 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%, we understand.

The multiple on offer here is high, which you’d expect for the wildfire peril. It will be interesting to see how investors respond and if this deal appears reasonably well-received it could be a good signal for others that might benefit from accessing the capital markets for wildfire reinsurance protection in catastrophe bond form.

You can read all about this new Greengrove Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.