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RenaissanceRe has successfully priced its latest catastrophe bond and secured the upper-end target size for coverage from the deal, with the Mona Lisa Re Ltd. (Series 2025-1) issuance now finalised to provide the company $350 million of collateralized retrocessional reinsurance from the capital markets.
Bermuda-headquartered RenaissanceRe, the reinsurance company and third-party capital manager, returned to the catastrophe bond market earlier in November, seeking $250 million of retrocessional reinsurance protection for its own portfolio and that of its flagship partner capital vehicle DaVinci Re.
As we reported in our first update on this deal, the target size of this Mona Lisa Re 2025-1 cat bond was increased to $300 million, while the price guidance for the two tranches of notes was also lowered.
Then, we reported earlier this week that the size target of the cat bond issuance was increased again, with $350 million of protection being sought while the price guidance was also lowered and fixed at the bottom-end of the already reduced guidance.
Now, sources have told Artemis that RenaissanceRe has been successful on both issuance size and pricing fronts, with the Mona Lisa Re Series 2025-1 cat bond now finalised to provide the upsized $350 million of protection target, while the two tranches of notes were each priced at the lowest end of the reduced spread guidance ranges.
RenaissanceRe has clearly benefitted from the strong investor demand being seen for new cat bond issues, resulting in more limit being secured at lower than initially projected pricing, once again sending a strong signal to potential cat bond sponsors, especially those seeking industry-loss index structured retrocession.
As a result, this Mona Lisa Re 2025-1 catastrophe bond will provide both RenRe and its DaVinci Re joint-venture reinsurer with $350 million of retrocessional reinsurance capacity, across both three and four year terms.
The notes will cover the reinsurer and its JV against losses caused by U.S., Puerto Rico, U.S. Virgin Islands, and D.C. named storm and earthquake events, as well as providing protection for Canadian earthquakes, all on an industry-loss index trigger and annual aggregate basis.
The Class A tranche of notes were initially targeted to provide $125 million of protection, which was first increased to $150 million and then again to $175 million, which is where we now understand the notes to have priced.
The Class A notes will provide four-years of protection and have an initial expected loss of 3.66%. They were first offered to cat bond investors with price guidance in a range from 8.5% to 9.25%, but that first fell to a revised range of 8% to 8.5%, and then fell further to 8%, which is where they have now been priced.
The Class B tranche, which are a little riskier, have a three-year term and at first also targeted $125 million of protection to begin, but then grew to $150 million and again were upsized to a targeted $175 million, which is where they have now been finalised.
The Class B notes have an initial expected loss of 4.84% and were initially offered to cat bond investors with price guidance in a range from 11% to 11.75%, which later fell to between 10.5% and 11%, subsequently being lowered to 10.5%, which is where we’re now told RenRe has successfully priced these notes.
So, overall RenRe upsized its latest Mona Lisa Re 2025-1 catastrophe bond by 40%, while the Class A notes saw their price decline by almost 10% from the initial guidance mid-point and the Class B notes saw their price decline by roughly 8%, again from the initial mid-point of guidance.
As we’ve been reporting, execution of industry loss triggered cat bonds have been particularly strong of late, with attractive pricing being secured by sponsors and almost every issuance growing in size, while also seeing its spread above expected loss tighten.
It reflects a still well-capitalised catastrophe bond investor market and with maturities still to come that currently outpace the remaining pipeline for this year, this market dynamic may continue.
You can read all about this Mona Lisa Re Ltd. (Series 2025-1) catastrophe bond from RenaissanceRe and every other cat bond ever issued in our extensive Artemis Deal Directory.
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