Hippo closes $110m debut catastrophe bond with Mountain Re

Spinnaker Insurance Company, a wholly owned subsidiary of homeowners insurtech Hippo Holdings, has completed a debut $110 million Series 2023-1 catastrophe bond with sponsor Mountain Re, exceeding the initial $100 million target by 10%.

As part of the transaction, Spinnaker has entered into a reinsurance contract with Mountain Re that offers protection against a variety of perils, including named storms, fire following an earthquake, severe thunderstorms, and winter storms, and provides Spinnaker with diversification of risk transfer capacity and access to capital markets.

The Class A Notes issued by Mountain Re came at a spread of 6.75%, with an initial base expected loss of 0.86% and an indemnity trigger over a three-year term with the Class A Notes scheduled to mature on June 5th, 2026.

The cat bond was closed on May 31, 2023. GC Securities, a division of MMC Securities, was the sole structuring agent and bookrunner.

Hippo president and CEO Rick McCathron (pictured), said: “The successful sponsorship of our debut catastrophe bond demonstrates our maturation as a company. It is the direct result of our geographic diversification efforts and will serve as an integral part of our reinsurance programme.

“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.”

Shiv Kumar, president of GC Securities, said: “Current market conditions require creative risk transfer structures like the one provided by Mountain Re. We’re very pleased to support Spinnaker as it delivers innovative insurance solutions and access to the reinsurance market to MGA, programme administration and insurtech companies.”

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