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TD Insurance, part of Canada’s TD Bank group, has now priced its debut MMIFS Re Ltd. (Series 2025-1) catastrophe bond deal, with the notes finalised to pay investors a risk spread at the bottom end of already reduced guidance, Artemis has learned.
This is the first catastrophe bond solely exposed to natural perils in Canada that we’ve ever analysed and tracked in our extensive Deal Directory.
TD Insurance entered the market with its first cat bond sponsorship back around the middle of December, seeking C$150 million of efficient catastrophe reinsurance protection through this MMIFS Re Ltd. issuance.
As we reported earlier this week, the target size for this first MMIFS Re catastrophe bond for TD Insurance remained unchanged, but the price guidance for the risk interest spread the notes will pay had fallen to below the initial range.
Now, sources have told us that the notes being issued have been priced, finalising the details of this debut cat bond for its sponsor.
MMIFS Re Ltd. will issue a single tranche of Series 2025-1 Class A notes, that are designed to secure C$150 million of multi-year reinsurance protection on an indemnity and per-occurrence basis, to cover TD Insurance for three-years against losses from the perils of earthquakes and severe convective storms (SCS) in Canada.
The Series 2025-1 Class A notes that MMIFS Re Ltd. is set to issue come with an initial expected loss of 0.42%.
The notes were first offered to cat bond investors with price guidance in a range from 3.25% to 3.75%, but in our last update we explained that the guidance had been lowered to a new range of between 2.9% and 3.25%.
Now, we understand that the notes have been successfully priced, with the MMIFS Re 2025-1 cat bond set to pay investors a risk interest spread of 2.9%, so the bottom end of the lowered guidance range.
Which implies a roughly 17% drop in spread from the mid-point of the initial price guidance range.
But, with these notes having a very low expected loss, the price multiple remains within the range of other recent risk-remote catastrophe bond issues and as this offers an element of diversification to investors and cat bond funds, it’s perhaps no surprise the price execution was strong for this debut issuance for TD Insurance.
It’s a good result for a first time cat bond sponsor, which should be encouraging for the company as it looks to build out diversifying sources of reinsurance capital over time and may help to bring TD Insurance back to cat bonds in future years.
You can read all about this MMIFS Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.
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