HCI Group launches tokenized reinsurance securities pilot program

HCI Group, Inc. (NYSE: HCI) announced the launch of a pilot project offering digital tokenized reinsurance securities, with returns structured to mirror specific participations by its Cayman Islands-based reinsurance subsidiary, Fortex Reinsurance SPC, Ltd., in HCI's catastrophe excess-of-loss reinsurance programs.

The pilot consists of three separate token series available through SurancePlus. Series A tokens are priced at $11.10 with an estimated redemption value of $36.00; Series B tokens are priced at $22.12 with an estimated redemption value of $49.00; and Series C tokens are priced at $30.01 with an estimated redemption value of $35.20. The estimated redemption values assume no catastrophe losses affecting the underlying reinsurance participation and redemption at the end of the annual risk period, before any additional return from collateral investment income.

Each token carries a distinct risk-return profile and may be purchased individually or in combination. The securities are structured to align with the annual reinsurance treaty cycle, resulting in a shorter investment horizon compared with traditional insurance-linked securities such as catastrophe bonds.

The minimum investment is $5,000. The securities are available to qualified U.S. accredited investors under Rule 506(c) of Regulation D and to qualified non-U.S. investors under Regulation S of the U.S. Securities Act of 1933.

Although synthetically structured to mirror Fortex Re's reinsurance participations, the securities are issued by SurancePlus and have no impact on Fortex Re's or HCI's reinsurance programs. Catastrophe losses on the underlying reinsurance contracts may cause a loss of some or all of the value of the securities, according to the company's statement.

"We are pioneering a new method of risk transfer by connecting the reinsurance market with new sources of capital," said Paresh Patel, HCI's Chairman and Chief Executive Officer.

HCI Group is a Tampa, Florida-based diversified holding company engaged in insurance, reinsurance, real estate, claims services, and insurance technology.

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