Global reinsurance firm Ariel Re has now finalised its first catastrophe bond to benefit its Lloyd’s of London Syndicate 1910 with a price drop of roughly 14%, as the coupon was fixed at the low-end of reduced guidance for its $150 million Titania Re Ltd. (Series 2021-1) retro cat bond.
Ariel Re came to the catastrophe bond market with its first transaction towards the end of May.
The Titania Re cat bond saw Ariel Re seeking $150 million of a multi-year retrocessional reinsurance cover against certain losses from U.S., Puerto Rico, U.S. Virgin Islands, D.C. and Canada named storms and earthquakes for the company.
The retrocessional reinsurance and industry loss based protection will run across a three year period, to June 2024.
The transaction did not upsize, remaining at the $150 million, but pricing followed recent cat bond execution trends, falling to the lowest end of guidance.
So, now priced and set to launch next week, the Titania Re cat bond will provide Ariel Re’s Syndicate 1910 with $150 million of annual aggregate retro reinsurance protection, attaching at an index loss level of $1 billion and covering up to $1.33 billion, after a $45 million per-event deductible.
The $150 million of Series 2021-1 Class A notes being issued by Titania Re Ltd, which have an initial expected loss of 1.98%, were initially offered to investors with coupon price guidance in a range from 5% to 5.5%, but that range was updated at a lower level of 4.5% to 5% last week.
Now, sources told us that the pricing has been finalised and the coupon was fixed at the low-end of reduced guidance, at 4.5%.
That implies a roughly 14% drop in pricing from the initial mid-point, which is aligned with the experience of other recent cat bond sponsors.