Nationwide makes another $8.85m recovery from Caelus Re V cat bond

U.S. primary insurer Nationwide Mutual Insurance Company has taken another loss payment from one of its catastrophe bonds as its reinsurance recoveries under the Caelus Re V Ltd. (Series 2017-1) Class D tranche of notes continue.

Nationwide began making reinsurance recoveries under this catastrophe bond back in July, once the impacts of catastrophe losses from 2017, including hurricanes Harvey & Irma, severe thunderstorms, California wildfires and winter storms, all pushed the insurers estimated aggregate ultimate net loss into the reinsurance layer covered by this cat bond tranche.

In July, we revealed Nationwide had made a first recovery of a $10.73 million loss payment, from its originally $75 million Caelus Re V Series 2017-1 Class D tranche of catastrophe bond notes.

That first claim was followed up quickly by a second reinsurance recovery from the cat bond tranche, as Nationwide also received a $10.3 million loss payment from the Caelus Re V 2017-1 Class D cat bond notes.

Nationwide continued to draw-down on the reinsurance protection this riskiest tranche of cat bond notes provides it with making another just under $3.54 million recovery in September, which when added to the other’s already made took Nationwide’s reinsurance recoveries under the Class D tranche of the Caelus Re V 2017-1 cat bond to almost $25 million.

Now, a fourth recovery has been made as the loss payments continue and Nationwide has benefited from another just over $8.85 million claim under the Class D Caelus Re V cat bond notes.

After this latest recovery, the tranche of notes remaining principal has now been reduced to just under $41.6 million, as Nationwide has now recovered around $33.4 million of reinsurance loss payouts so far.

Reinsurance recoveries are expected to continue, as this particular tranche of notes is marked down as likely to suffer a total loss of principal on secondary pricing sheets.

Nationwide is also expected to benefit from loss payments under at least one other tranche of notes from this Caelus Re V catastrophe bond as well, as the insurers reported estimate of aggregate UNL stands above where the Class C tranche exhausts.

There is also a good chance that Nationwide makes some reinsurance recoveries under its 2018 Caelus Re cat bond as well.

If that ends up being the case and the secondary market has these tranches all marked accurately, it suggests Nationwide’s overall cat bond reinsurance recoveries for 2017 and 2018 losses could reach somewhere around the $280 million mark and have some way to go at this time.

You can read all about the catastrophe bonds that have defaulted, faced a loss of principal, or that are considered at risk of loss in our directory detailing catastrophe bond defaults and potential payouts.