Sutton National gets upsized $100m Greengrove Re cat bond to provide CA fire cover
Sutton National Group has now secured its upsized target of $100 million in fire reinsurance protection for California via its debut Greengrove Re Ltd. (Series 2025-1) catastrophe bond issuance, while the notes have been priced within the initial guidance, we understand.
Sutton National Group entered the cat bond market for the first time earlier this month, looking to secure $75 million or more in fire reinsurance protection in California from this Greengrove Re Series 2025-1 deal.
It marks a rare California wildfire exposed catastrophe bond and coming so soon after the devastating Los Angeles fires of January 2025 it provides a test of cat bond investor appetite for this peril.
We then reported in our first update on this deal, the target size for the Greengrove Re cat bond was raised by 33% to $100 million in response to investor demand, while the spread guidance was narrowed towards the upper-end of initial guidance.
Now, we’ve learned that the Greengrove Re 2025-1 cat bond notes have been priced and as a result Sutton National has secured its upsized target for $100 million of reinsurance from the deal, while the spread was finalised at the mid-point of initial guidance, we understand.
As a result, Greengrove Re Ltd. will now issue $100 million of notes 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.
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 that follow earthquake events, while other states can be added to the coverage after a reset, should the sponsor so choose.
The now confirmed as $100 million of Series 2025-1 Class A notes come with an initial expected loss of 1.44% and were first offered to cat bond investors with price guidance in a range from 7.5% to 8%, which then narrowed to an updated range of 7.75% to 8%.
We’re now told that the notes have been priced to pay investors a spread of 7.75%, so within the initial guidance and at the mid-point of that range.
Which demonstrates that there is appetite within the catastrophe bond investor base for California wildfire risk and for Sutton National is a good result.
However, we suspect some funds and investors will have shied away, given how soon this has come after the Los Angeles wildfire events. But it is positive to see a wildfire cat bond getting over the line, as it sends a positive signal to other insurers or reinsurers that they can look to the cat bond market to augment their wildfire protection in future.
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.
