Life insurer and part of the Securian Financial Group, Minnesota Life Insurance Company is set to benefit from $100 million of capital markets backed reinsurance protection with its first mortality catastrophe bond, as the La Vie Re Limited (Series 2020-1) transaction has now been priced towards the upper-end of guidance.
With final pricing now reached, according to our sources, the transaction is set for completion at the end of this week, after which Minnesota Life will have bolstered its mortality reinsurance protection using an insurance-linked securities (ILS) transaction for the first time.
Mortality catastrophe bonds remain relatively rare in the ILS sphere, only contributing a small amount of the outstanding cat bond market these days.
The La Vie Re Limited mortality cat bond transaction was originally launched to investors at the beginning of October.
La Vie Re is a recently registered Bermuda based company and will issue a single $100 million tranche of Series 2020-1 notes. The transaction hasn’t changed in size through marketing, suggesting that Minnesota Life has successfully achieved its target of adding $100 million of collateralized mortality reinsurance from the capital markets through its first mortality cat bond.
The $100 million of notes will be sold to investors and the proceeds used to collateralize an excess-of-loss reinsurance agreement between the insurer and Securian’s captive reinsurer 1880 Reinsurance, which is based in Vermont.
The notes, that will provide their extreme mortality reinsurance coverage on a loss ratio basis, were originally marketed to investors with price guidance in a range from 2.5% to 3%.
That guidance was narrowed towards the upper-end of that range, to 2.75% to 3% and sources now tell us that final pricing has been set today, at 2.85%, so in the upper-end of initial guidance.
It’s encouraging to see a rare mortality catastrophe bond deal successfully coming to market during a pandemic, demonstrating that the appetite is still there to assume life risks in the ILS investor community.