Another new sponsor has entered the catastrophe bond market, with Ariel Re’s Lloyd’s of London Syndicate 1910 set to benefit from a targeted $150 million of retro protection from a Titania Re Ltd. (Series 2021-1) cat bond issuance, according to sources.
Syndicate 1910 is the underwriting vehicle that private equity backed reinsurer Ariel Re principally uses for its global reinsurance business, so securing efficient retrocessional reinsurance from the capital markets makes sense for the company.
Ariel Re is no stranger to insurance-linked securities (ILS) investors and the capital markets, having itself a practice in working with third-party investors to share in the performance of segments of its book.
For its first ever catastrophe bond, a special purpose insurer (SPI) named Titania Re Ltd. has been registered in Bermuda.
Titania Re Ltd. will look to issue a single $150 million tranche of Series 2021-1 Class A notes, that will be sold to investors and the proceeds used to collateralize underlying aggregate reinsurance agreements between the SPI and cedent Syndicate 1910.
The notes will provide Syndicate 1910 with a multi-year source of reinsurance to cover certain losses from U.S., Puerto Rico, U.S. Virgin Islands, D.C. and Canada named storms and earthquakes.
The coverage will run across a three year period, to June 2024, we understand and is structured using an industry loss trigger providing annual aggregate protection, attaching at an index loss level of $1 billion and covering up to $1.33 billion, after a $45 million per-event deductible, we understand.
We’re told that the $150 million of Series 2021-1 Class A notes will have an initial expected loss of 1.98% and have been offered to investors with coupon price guidance in a range from 5% to 5.5%.
Another notable fact with this transaction is that TigerRisk Capital Markets & Advisory is the sole structuring agent for the Titania Re catastrophe bond, which we believe is the first time the broker’s capital markets team has taken that role on a 144A cat bond transaction.
As ever, it’s particularly encouraging to see new sponsors like Ariel Re’s syndicate 1910 enter the catastrophe bond market and it’s a further reflection of the significant value sponsors are finding in the cat bond market right now, given the keen pricing and strong execution on offer.