Wrigley Re’s catastrophic bond price predictions fall for Blackstone captive


Price expectations have fallen for the Wrigley Re Ltd. catastrophe bond transaction. (Series 2021-1), which is issued to provide parametric earthquake protection to Gryphon Mutual Insurance Company, a captive real estate insurer owned by investment giant Blackstone.

The Wrigley Re 2021-1 California Earthquake Parametric Catastrophic Bond remains at $ 50 million, we understand for now, but protection should come at a lower coupon than initially marketed.

As we explained during the launch of this cat bond deal earlier this month, Gryphon Mutual Insurance Company, Blackstone’s property insurance captive, entered the catastrophe bond market with the help of the global reinsurance company Hannover Re.

Hannover Re is acting as the ceding reinsurance company for this transaction, interfacing with capital market investors on behalf of Gryphon Mutual Insurance, which is the ceding insurer that will benefit from the reinsurance protection provided by the Notes.

Blackstone created Gryphon Mutual Insurance as a captive insurer focused on real estate in 2020 and said at the time that the captive would give him more control over his property insurance program and help reduce costs for the company. ‘business.

Access to capital markets for a slice of parametric earthquake-friendly cover is one way for the captive to generate benefits for Blackstone, as the investment giant’s exposure to property damage in California is likely to be significant. both through its investments and potentially also for the coverage of its staff and operations there.

Wrigley Re Ltd. is still on track to issue a single $ 50 million tranche of Series 2021-1 Class A Notes, which will provide a source of fully guaranteed reinsurance protection against losses due to California earthquakes on a parametric and event triggering, to Gryphon Mutual, but ultimately to the benefit of Blackstone itself.

Coverage will run for a period of approximately three years until the end of June 2024 and will focus on specific calculation locations for the parametric trigger for the earthquake.

The $ 50 million in notes to be issued by Wrigley Re Ltd. will have an expected initial loss of 0.99% and were first offered to investors in cat bonds with price guidance between 2.75% and 3.25%.

Now that price direction has been reduced, with the revised coupon range falling from 2.25% to 2.75%, we are told.

At mid-term, this represents a drop of around 17% in prices at the time of marketing.

As a result, it appears that the parametric insurance protection that Blackstone and its captive insurer will enjoy with its first catastrophe bond could be offered at a very attractive price.

You can read all about this catastrophe bond from Wrigley Re Ltd. (Series 2021-1) and on all other cat bonds never issued in the Artemis Deal Directory.

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