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Ariel Re hails carbon offset feature of new Titania Re catastrophe bond


Having recently completed the placement of a new catastrophe bond, the slightly upsized to $125 million Titania Re Ltd. (Series 2023-1) issuance, the leadership of global reinsurance company Ariel Re have hailed the fact the cat bond is the first to have an embedded carbon offset feature.

ariel-re-logoArtemis first revealed this new cat bond from Ariel Re back at the end of January, when the reinsurer was seeking $115 million of collateralized retro reinsurance to cover certain losses from U.S. 50 state, Puerto Rico, U.S. Virgin Islands, D.C. and Canada named storms and earthquakes from the deal.

Ariel Re’s latest and third Titania Re cat bond was well-received by investors, with the price guidance being lowered twice during its marketing, as well as the small upsized to $125 million.

At pricing of this new cat bond, as we reported ten days ago, Ariel Re secured the upsized amount with spreads fixed at the low-end of twice reduced guidance, which we believe provides a clear signal of the catastrophe bond market reaching an equilibrium, in terms of pricing demanded by its investors and investment fund managers.

It’s important to note though, that while the price guidance was lowered twice, this new Titania Re cat bond has still priced far higher than the previous deals Ariel Re has sponsored, reflecting the hard reinsurance market environment.

Today, Ariel Re’s leadership hailed what they call a “first-of-its-kind carbon offset feature,” that was detailed in the original terms of the Titania Re 2023-1 catastrophe bond.

This offset approach would see Ariel Re looking to purchase carbon offset options from a qualified provider, to generate carbon credits in the event of a significant qualifying catastrophe event occurring that results in the need for a large number of homes, commercial properties and vehicles to be replaced.

Ariel Re explained that there is no rule that requires replacements to have lower carbon emissions, so with its third Titania Re catastrophe bond the reinsurer hopes to mitigate what it sees as a “missed opportunity,” buying carbon offsets that are “equivalent to the benefit that would have come from rebuilding or replacing buildings and vehicles with those which have a less damaging carbon impact.”

Ryan Mather, Chief Executive Officer of Ariel Re, commented, “Ariel Re is extremely proud to have sponsored our third cat bond with a new feature relating to carbon offsets. Our vision is to be the premier manager of reinsurance risk, and launching environmentally-friendly initiatives such as Titania Re III for the building back of business and communities in the wake of natural disasters shows that we can be innovative in the reinsurance solutions we provide to our clients.”

Matthew Twilley, Head of Ceded at Ariel Re, added, “While there is no directive to build back greener, Ariel Re is taking the initiative to help people and businesses to get back on their feet after natural disasters in a way that reduces the harm done to the planet. We want to do good while helping others to do well.”

The idea is to highlight the large carbon footprint of a significant catastrophe event and ultimately encourage that this is offset, where possible, with Ariel Re taking a leading role to demonstrate this within its new catastrophe bond.

You can read all about this new Titania Re Ltd. (Series 2023-1) catastrophe bond from Ariel Re, as well as details on over 900 other cat bond transactions in the extensive Artemis Deal Directory.

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