Titania Re Ltd. (Series 2025-1)

Ariel Re has returned to sponsor what will be the fifth catastrophe bond under its Titania Re Ltd. series of deals and for the first time the reinsurer has included wildfires as a covered peril.

Ariel Re is initially seeking $125 million of multi-peril retrocessional reinsurance with this Titania Re Series 2025-1 cat bond deal.

Where its previous catastrophe bonds have all covered the peak perils of U.S. 50 state, Puerto Rico, U.S. Virgin Islands, D.C. and Canada named storms and earthquakes, for the first time Ariel Re has added wildfire risks to this new cat bond, seeking coverage across the US and District of Columbia.

Titania Re will issue two tranches of Series 2025-1 notes that will be sold to cat bond investors and the proceeds will collateralize the reinsurance agreements between the issuer and the ceding insurer Syndicate 1910.

We’re told the two tranches of notes will both provide Ariel Re with annual aggregate and industry loss triggered retro protection, over a four year term and four aggregate risk periods.

The target is to secure at least $125 million of protection from these notes, while each tranche will also have room to upsize, should investor appetite prove strong and Ariel Re opt to take advantage of that to further build on its protection.

Titania Re Ltd. is looking to issue a $50 million or larger Class A tranche of Series 2025-1 notes that will have an initial attachment point at $2.5 billion of losses, with exhaustion set at $2.8 billion (remember those are weighted industry-loss index figures). There will be a $75 million franchise deductible for named storm and earthquake losses to qualify and $187.5 million for wildfires before they will be taken into account to aggregate against them. There is also a wildfire contribution cap at $1.25 billion.

The Class A notes come with an initial attachment probability of 2.54%, an initial base expected loss of 2.25% and they are being offered to cat bond investors with price guidance in a range from 6.75% to 7.25%.

Also being offered are a $75 million Class B tranche of Series 2025-1 notes, which will have an initial attachment point at $1.3 billion of losses, with exhaustion set at $1.6 billion, so are riskier. There will be a $75 million franchise deductible for named storm and earthquake losses to qualify and $187.5 million for wildfires again. But for the Class B notes the wildfire contribution cap is lower at $650 million.

The Class B notes come with an initial attachment probability of 7.35%, an initial base expected loss of 6.35% and they are being offered to cat bond investors with price guidance in a range from 15.75% to 16.5%.

Update 1:

We understand that Ariel Re is now targeting up to $150 million of aggregate retrocessional reinsurance from its new Titania Re 2025-1 catastrophe bond issuance.

The Class A notes are now targeted at between $50 million and $75 million in size, while their price guidance has been lowered to a new range of 6.25% to 6.75%.

The Class B notes remain at their initial target size of $75 million, while their spread price guidance has been updated at the single figure of 16.25%.

It’s important to note, we’re also told by sources that the targeted settlement date for this Titania Re 2025-1 cat bond issuance has been moved out to July 1st, which would make this catastrophe bond a third-quarter deal. We incorporate new cat bonds from their settlement date, being the time the notes are distributed.

Update 2:

Ariel Re secured the upsized target for $150 million of retrocessional reinsurance from its new Titania Re 2025-1 catastrophe bond.

The Class A notes were finalised at $75 million in size, with a spread of 6.25%.

The Class B notes were finalised at $75 million in size, with a spread of 16.25%.