Nationwide Mutual Insurance Company is back in the catastrophe bond market with a target to secure $200 million or more in multi-peril reinsurance protection from the capital markets with a new Aquila Re I Ltd. (Series 2026-1) transaction, its third to use this special purpose insurer, Artemis has learned.
The US primary insurer is a long-standing sponsor of catastrophe bonds, having first secured property catastrophe reinsurance from the capital markets through a Rule 144A cat bond back in 2008.
It will become the third to be issued using the Bermuda-based Aquila Re I Ltd. special purpose insurer, with Nationwide having last having secured $225 million of reinsurance through an Aquila Re I Ltd. (Series 2024-1) issuance two years ago.
Nationwide Mutual is again seeking very similar coverage to its last cat bond sponsorship, we understand, with a target to secure $200 million of multi-peril and multi-year indemnity triggered and per-occurrence based reinsurance protection from this new transaction.
Aquila Re I Ltd. is aiming to issue two tranches of Series 2026-1 notes, that will be sold to investors and the proceeds used to collateralize reinsurance agreements with Nationwide.
The $200 million or more in reinsurance from this new Aquila Re I Series 2026-1 cat bond will protect Nationwide Mutual against losses from the perils of US named storm, earthquake, severe thunderstorm, winter storm, wildfire, meteorite impact, volcanic eruption, the same range of perils as its previous two cat bonds under the structure.
The protection from the Aquila Re I Series 2026-1 cat bond notes will run across a four-year term, from June 2026 to the end of May 2030, we understand.
Notably, Nationwide’s last two cat bonds only featured three-year terms of coverage. So this latest issuance sees the insurer looking to extend the capital markets backed protection for a longer term.
Aquila Re I Ltd. is offering a $100 million Series 2026-1 Class A-1 tranche of notes that would attach their coverage at $750 million of losses after stated reinsurance, exhausting at $1.15 billion, giving them an initial attachment probability of 0.64%.
The $100 million of Class A-1 notes come with an initial base expected loss of 0.52% and are being offered to cat bond investors with price guidance in a range from 4% to 4.75%, sources said.
A second also $100 million Class B-1 tranche of notes would attach their coverage at $1 billion of losses but have no stated reinsurance we understand and so are actually a riskier layer, exhausting at $1.95 billion, giving them an initial attachment probability of 2.44%.
The $100 million of Class B-1 notes come with an initial base expected loss of 1.24% and are being offered to cat bond investors with price guidance in a range from 4.75% to 5.5%, we are told.
We understand these new Series 2026-1 notes from Aquila Re I will sit alongside Nationwide’s other in-force cat bond from 2024 for this coming year.
Nationwide’s $300 million Aquila Re I 2023-1 catastrophe bond is scheduled to mature this June. So this new issuance will replace at least some of that capital markets backed reinsurance for the insurer.
As a result, it’s good to see Nationwide Mutual return to cat bonds again with an ambition to sustain capital markets coverage within its reinsurance tower.
You can read all about this new Aquila Re I Ltd. (Series 2026-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.
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