1 month ago
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Ariel Re has increased its target for the new Titania Re Ltd. (Series 2024-1) catastrophe bond transaction, with the indicative size raised by roughly 57% to secure $275 million in multi-peril industry-loss triggered retrocessional reinsurance, while at the same time the price guidance has been reduced.
Ariel Re returned to the catastrophe bond market at the end of October looking to secure $175 million or more in multi-peril industry-loss triggered retrocession through this new cat bond deal.
The transaction series is one we’d seen before. As we reported back in May, Ariel Re had opted to pull the catastrophe bond issuance at that time in response to the dynamic and higher cat bond market pricing environment, so the Titania Re Ltd. (Series 2024-1) transaction was not issued at that time.
Now, resurrected later in the year at a time when demand for new cat bond issues is high and the market has some excess cash, while the pipeline is only still rebuilding after the summer lull, Ariel Re looks set to be the latest to benefit from elevated investor demand.
Titania Re Ltd. is aiming to issue two tranches of Series 2024-1 notes, which will be sold to investors and the proceeds used to collateralize a multi-year source of retro reinsurance for Ariel Re, covering certain losses from U.S. 50 state, Puerto Rico, U.S. Virgin Islands, D.C. and Canada named storms and earthquakes.
Both tranches of Titania Re 2024-1 notes are set to provide Ariel Re with annual aggregate and industry loss triggered retro protection, over a three year term to November 27th 2027.
The target size across the two tranches of notes was initially for $175 million of retrocessional protection to be secured.
Now, we’re told by sources that the size has been increased, with $275 million of notes now being offered, a roughly 57% increase.
What was initially pitched as a $100 million Class A tranche of Series 2024-1 notes are now offered at $150 million in size, we understand.
The Class A notes have an initial base expected loss of 2.47% and were first offered to cat bond investors with price guidance in a range from 7.25% to 8%, but that guidance range has now been reduced to between 6.5% and 7.25%.
What was a targeted $75 million Class B tranche of notes are now being offered at $125 million in size, sources explained.
The Class B tranche of notes come with an initial base expected loss of 4.02% and were initially offered to cat bond investors with price guidance in a range from 10.5% to 11.25%, but we’re now told the spread price guidance has also been reduced to an updated range of 9.75% to 10.5%.
As a result, it seems Ariel Re could secure its latest catastrophe bond at a size 57% larger than the initial target and with pricing at the bottom ends of initial guidance, or even lower.
Which would be just the latest example of very strong execution in the catastrophe bond market in recent weeks, with almost every new cat bond having priced down (some meaningfully) since the US wind season began to draw towards its close.
You can read all about this new Titania Re Ltd. (Series 2024-1) catastrophe bond from Ariel Re, as well as details on over 1,000 other cat bond transactions in the extensive Artemis Deal Directory.
English (US) ·