Spinnaker Insurance Company, a fully owned subsidiary of Hippo Holdings, has announced a significant stride in the insurance industry, unveiling the successful sponsorship of a catastrophe bond from Mountain Re Ltd.
The company, operating under the broader spectrum of the New York Stock Exchange-listed Hippo Holdings Inc., has a notable presence in the InsurTech sector.
The catastrophe bond, termed as the Series 2023-1, represents a value of $110m, exhibiting a 10% increase from the initial transaction target of $100m. GC Securities, a division of MMC Securities LLC, was instrumental in this transaction, acting as the sole structuring agent and bookrunner.
Delving into the specifics, Spinnaker Insurance provides diverse insurance solutions and offers access to the reinsurance market for MGA, program administration and InsurTech companies. As part of this sponsorship deal, Spinnaker will engage in a reinsurance contract with Mountain Re, offering protection against multiple perils including named storms, severe thunderstorms, winter storms, and even fires subsequent to earthquakes.
The freshly procured funding is earmarked to facilitate Spinnaker’s growth, directly benefiting from its geographic diversification efforts and serving as a crucial part of its reinsurance programme. Furthermore, the deal bestows upon Spinnaker diversified risk transfer capacity and capital market access.
Hippo president and CEO Rick McCathron affirmed this strategic manoeuvre stating, “The successful sponsorship of our debut catastrophe bond demonstrates our maturation as a company… Mountain Re is a multi-year, capital-markets-backed source of reinsurance that provides reinsurance coverage against catastrophic events for Hippo Insurance Service’s homeowners products underwritten by Spinnaker.”
The Class A Notes issued by Mountain Re Ltd. is expected to mature by June 5th, 2026. This follows an indemnity trigger over a three-year term and comes with a spread of 6.75% and an initial base expected loss of 0.86%.
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