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Ariel Re gets upsized $175m Titania Re cat bond at below-guidance pricing


Global reinsurance firm Ariel Re has successfully upsized its latest catastrophe bond issuance and also secured attractive pricing for it, as the coupon for the $175 million of notes to be issued by Titania Re Ltd. (Series 2021-2) has now settled below the initial guidance.

ariel-re-logoAriel 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 is the second catastrophe bond issuance in a year to be sponsored by Ariel Re, with its Syndicate 1910 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 originally 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.

As we later reported, the target size for the Titania Re 2021-2 cat bond increased to $175 million, while at the same time the pricing guidance was narrowed and dropped, suggesting strong execution for Ariel Re.

We’re now told that the upsized $175 million target size for the cat bond was achieved, while pricing has settled below-guidance for Ariel Re.

The $175 million of Series 2021-2 Class A notes, which have an initial expected loss of 3.32%, were first offered to investors with coupon price guidance in a range from 6.75% to 7.25%.

That range narrowed and was lowered, to a new range of 6.25% to 6.75%.

At final pricing, we’re told that the coupon was fixed at 6.5%, so sitting below the initial range and right in the middle of the revised and lowered price guidance.

Which represents a multiple-at-market of 1.96 times the expected loss for the Titania Re 2021-2 cat bond.

That compares to a multiple of 2.27 times expected loss for Ariel Re’s first cat bond the $150 million Titania Re 2021-1 issuance from earlier this year, that had an initial expected loss of 1.98% and priced with a coupon of 4.5%.

The pricing is actually quite aligned, as a higher returning cat bond note will typically deliver a lower multiple-at-market, with both issuances seeing strong execution and investor acceptance it seems.

So, another successful visit to the insurance-linked securities (ILS) market for retrocessional reinsurance protection for Ariel Re.

You can read all about this second catastrophe bond from Ariel Re, the $175 million Titania Re Ltd. (Series 2021-2), as well as every other cat bond ever issued in the Artemis Deal Directory.

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