Global reinsurance firm Ariel Re is aiming to upsize on its latest catastrophe bond issuance to benefit its Lloyd’s of London Syndicate 1910, with the target for its Titania Re Ltd. (Series 2021-2) retro industry loss cat bond deal now increased to $175 million.
Ariel Re returned to the cat bond market a few weeks ago, hoping to secure $150 million of multi-year catastrophe retrocessional reinsurance from the ILW structured Titania Re cat bond issuance.
It’s the second catastrophe bond issuance in a year from Ariel Re and while it targets a similar layer of coverage, in terms of attachment, it has a higher expected loss, suggesting Ariel Re’s portfolio has changed and it is likely to have assumed more property catastrophe reinsurance risk this year.
Syndicate 1910 is the ultimate ceding company, which is the underwriting vehicle that private equity backed, expansive reinsurer Ariel Re principally uses for its global reinsurance business
Bermuda registered special purpose insurer (SPI) Titania Re Ltd. was aiming to issue a $150 million tranche of notes, to secure Ariel Re a three-year source of 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, on an annual aggregate and industry loss trigger basis.
We’re now told that the target size for this issuance has increased to $175 million, while at the same time the pricing guidance has narrowed and dropped.
The now $175 million of Series 2021-2 Class A notes have an initial expected loss of 3.32% and were at first offered to investors with coupon price guidance in a range from 6.75% to 7.25%, but that has now narrowed and been lowered, to a new range of 6.25% to 6.75%, we understand.
Which suggests that Ariel Re will secure its latest cat bond coverage at the bottom end of initial pricing, or perhaps even below it.
That would represent strong execution for an aggregate retro cat bond deal, demonstrating that respected sponsors can secure very attractive pricing terms in the catastrophe bond market right now.
We understand the notes will be priced later today and issuance completes later in December.