Nationwide’s Caelus Re 2017 cat bond grows to $375m as pricing drops

by Artemis on April 27, 2017

The latest catastrophe bond from Nationwide Mutual Insurance Company is set to increase in size by 25% to $375 million, while at the same time pricing has dropped on the four tranches of the Caelus Re V Ltd. (Series 2017-1) cat bond.

When the Caelus Re V 2017 catastrophe bond was launched for sponsoring primary insurer Nationwide Mutual, it was targeting just $300 million of capital markets backed reinsurance coverage across the four tranche of notes.

The cat bond seeks fully-collateralized multi-peril reinsurance coverage for Nationwide Mutual and its subsidiaries including auto insurer Titan, with protection against losses from multiple U.S. perils, including U.S. named storm, earthquake, severe thunderstorm, winter storm, wildfire, meteorite impact, volcanic eruption, and other perils, all afforded on an indemnity and annual aggregate basis.

Now, we understand that all four tranches of notes have increased in size during the marketing process, with the total cat bond deal size now expected to reach $375 million, while at the same time investors have shown their appetite for new cat bonds once again, helping pricing fall to the bottom of guidance across all tranches.

The Class A tranche of notes launched at $60 million has grown to $75 million in size, we’re told, while the initial coupon price guidance of 3.25% to 3.75% has now been lowered to the bottom of that range at 3.25%.

The $120 million Class B tranche has grown to $150 million in size, while the launch price guidance of 4.5% to 5% is now set to complete at the lower end of 4.5%.

The $60 million Class C tranche has grown to $75 million in size, while the price guidance of 6.5% to 7.25% has dropped down to the bottom at 6.5%.

Finally, the riskiest $60 million Class D tranche has also grown to $75 million, while its coupon guidance of 9.25% to 10% has fallen again to the bottom at 9.25%.

Again, the catastrophe bond investor community has demonstrated its appetite for new risk and its willingness to offer expanded coverage to sponsors. With this cat bond covering virtually all natural perils and supporting auto claims through Nationwide’s Titan subsidiary, and still achieving low pricing, it is a further reflection of the opportunity that sponsors have in the cat bond market right now.

The Caelus Re V 2017-1 cat bond is due to complete in a weeks time.

You can read all about the Caelus Re V Ltd. (Series 2017-1) catastrophe bond and all of Nationwide Mutual’s previous cat bonds in the Artemis Deal Directory.

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