Bamboo Insurance and Sutton National Renew Important Reinsurance Partnerships for 2025

Renewal of Reinsurance Partnerships: Bamboo Insurance and Sutton National

Bamboo Insurance, along with Sutton Specialty Insurance Company and Sutton National Insurance Company, has made a significant announcement regarding the renewal of their reinsurance program. This partnership aims at addressing the insurance needs of homeowners in California, particularly in the wake of increasing natural disaster risks.

The renewal includes the successful closing of the Greengrove Re Ltd. Series 2025-1 catastrophe bond, which raised $100 million. This bond has an enticing spread of 7.75% and a projected base expected loss of 1.44%. Notably, this issuance reflects a 33% increase from the original $75 million target, showcasing the growing confidence in Bamboo's business model and the resilience of the insurance market.

The structure of this transaction provides a robust financial backbone for coverage against natural disasters. Specifically, the bond features an indemnity trigger that spans a three-year term, with a maturity date set for April 7th, 2028. The lower-than-expected final spread also demonstrates investor trust, falling within the initial price guidance of 7.50% to 8.50%.

In conjunction with the catastrophe bond, a sidecar transaction named Greenshoots Re Ltd. has been executed, which involves the issuance of $70 million in preference shares supported by several institutional investors. This sidecar enables Sutton National to engage in a quota share reinsurance contract with Bamboo, adding yet another layer of financial support for California homeowners.

This collaboration marks a vital milestone in Bamboo's development and its ongoing partnership with Sutton National. According to John Chu, the CEO of Bamboo, these transactions symbolize a significant validation of the company's efforts in catastrophe risk management. He expressed his gratitude towards investors for their support, emphasizing the importance of these financial tools in addressing the increasing challenges posed by natural disasters in California.

Shane Haverstick, CEO of Sutton National, echoed these sentiments, highlighting that the catastrophe bond and sidecar transactions complement the existing reinsurance structure, which includes a catastrophe excess of loss tower and quota share panel involving top-tier reinsurers in the industry.

As part of this strategic alliance, GC Securities played a pivotal role by serving as the sole structuring agent for both the catastrophe bond and sidecar issuance. Liam Martens, Managing Director of GC Securities, noted that investor support has surged, particularly after recent wildfires in Los Angeles, reflecting a broader recognition of Bamboo's innovative approach to risk management.

This reinsurance program renewal not only fortifies the financial footing of both companies but also enhances their ability to meet the evolving needs of policyholders. Given the unpredictable nature of climate-related disasters, these transactions reveal the proactive measures being undertaken by Bamboo and Sutton National to safeguard homeowners.

Ultimately, this renewed agreement is poised to deliver a more resilient insurance framework for California residents, affirming the commitment of both companies to proactively manage risks and provide comprehensive coverage in these challenging times.