MMIFS Re Ltd. (Series 2025-1)

This is the first catastrophe bond to ever be sponsored by TD Insurance, part of the TD Bank group, a Canadian financial services company.

This is also the first cat bond from a Canadian sponsor and the first ever cat bond to be solely exposed to catastrophe perils in Canada. Canadian perils are regularly included in international and North American multi-peril deals, but so far we’ve never seen one focused on risks in Canada only.

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, including Security National Insurance, 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.

Update 1:

We’re told there has been no change in size to the MMIFS Re Ltd. (Series 2025-1) catastrophe bond issuance for sponsor TD Insurance, but the price guidance has been lowered, with a new range of between 2.9% and 3.25% now offered.

Update 2:

We understand that TD Insurance has now secured the targeted C$150 million of reinsurance protection against Canada earthquake and severe convective storm (SCS) losses from this MMIFS Re Ltd. (Series 2025-1) catastrophe bond issuance, as the notes have now been priced at the low-end of reduced guidance, to pay a risk spread of 2.9%.