1 week ago
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TD Insurance, part of Canada’s TD Bank, is seeking C$150 million in reinsurance from the capital markets through its debut MMIFS Re Ltd. (Series 2025-1) catastrophe bond deal, which will be the first cat bond to solely cover perils in that country, Artemis has learned.
Canadian catastrophe perils do regularly feature in the cat bond market, but only through multi-peril deals covering North American risks, or international territories.
This will become the first ever cat bond to be solely exposed to catastrophe perils in Canada that we’ve analysed and tracked in our extensive Deal Directory.
It is also the first cat bond for a Canadian sponsoring company, in TD Insurance, which has now turned to the capital markets to source efficient catastrophe reinsurance protection.
MMIFS Re Ltd. has been established in Bermuda to issue this debut catastrophe bond for TD Insurance, we understand.
On the naming of what will be the special purpose insurer, we assume it has been named after Meloche Monnex Insurance and Financial Services Inc., which is a TD-owned Quebec based distributor for TD Insurance policies, it appears.
MMIFS Re Ltd. is set to offer a single Series 2025-1 Class A tranche of notes to cat bond investors, which will be sold and the proceeds used to fully-collateralize a reinsurance agreement to protect TD Insurance group underwriting entities, we are told.
The issuance is currently targeted at C$150 million in size, with the goal to secure multi-year reinsurance protection for TD Insurance to cover the perils of earthquakes and severe convective storms (SCS) in Canada.
The notes will provide TD Insurance with a source of indemnity and per-occurrence based reinsurance across an almost three-year term, from issuance around early to mid-January 2025 through to the end of 2027, sources said.
The C$150 million of Series 2025-1 Class A notes that MMIFS Re Ltd. is offering would attach their coverage at C$2.35 billion of losses to TD Insurance, exhausting their protection at C$2.5 billion of losses, we understand.
The notes have an initial attachment probability of 0.45%, an initial expected loss of 0.42% and are being offered to cat bond investors with price guidance in a range from 3.25% to 3.75%, making them relatively remote in risk terms.
One final point of note, being a Canadian catastrophe bond denominated in Canadian dollars, we are told the collateral will be invested in EBRD notes but that these will pay a return-on-collateral based on just below the Canadian Overnight Repo Rate Average (CORRA), the first time we’ve ever seen this in a catastrophe bond deal.
It’s encouraging to see a new first time sponsor entering the catastrophe bond market, especially so being the first ever Canadian sponsor and the first ever cat bond issuance to be solely focused on perils in Canada.
There are other insurers in Canada that have the scale and natural catastrophe exposure to become cat bond sponsors in future, so this MMIFS Re issuance should serve to further promote the potential for accessing reinsurance through the capital markets to those companies.
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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