Nationwide Mutual secures 50% upsized $225m Aquila Re I cat bond

U.S. primary insurer Nationwide Mutual Insurance Company has now finalised and priced its latest catastrophe bond, securing the 50% upsize to $225 million in multi-peril reinsurance from the Aquila Re I Ltd. (Series 2024-1)  transaction, with the notes priced below the initial guidance.

Nationwide Mutual ventured back to the catastrophe bond market earlier this month, with the second takedown under its Bermuda based Aquila Re I Ltd. special purpose insurer.

This new Aquila Re I deal is the tenth catastrophe bond issuance sponsored by Nationwide that we have listed in our extensive Deal Directory.

When this new cat bond was first marketed to investors, Nationwide Mutual was targeting $150 million or more in multi-year and multi-peril fully-collateralized reinsurance protection from the catastrophe bond market.

As we later reported, the target size of the cat bond issuance rose, with then up to $225 million in reinsurance being sought across the two tranches of Aquila Re I 2024-1 cat bond notes that were being offered.

Now, sources tell us that the upsizing was achieved, with the transaction set to complete at $225 million, so 50% larger than the initial target for $150 million of reinsurance.

The notes have now been priced, we understand, and for both of the tranches of notes on offer the spreads have now been fixed at a level below the initial price guidance ranges.

The now confirmed to be $225 million in reinsurance from this new cat bond will protect Nationwide Mutual against losses from the perils of US named storm, earthquake, severe thunderstorm, winter storm, wildfire, meteorite impact, and volcanic eruption, across a three-year term, from June 2024 to the end of May 2027 and on an indemnity trigger and per-occurrence basis.

The Class A-1 tranche were preliminarily sized at $100 million, but have successfully been increased to $125 million in size, we are told.

The Class A-1 notes come with an initial base expected loss of 1.01% and were first offered to cat bond investors with price guidance in a range from 6% to 6.75%, but that subsequently dropped to a range of 5.5% to 6%, and we’re now told the notes priced at the bottom of that updated guidance, to pay investors a spread of 5.5%.

The Class B-1 tranche of notes were preliminarily sized at $50 million but have now doubled to $100 million in size, sources told Artemis.

The  Class B-1 notes are riskier, coming with an initial base expected loss of 2.44% and were first offered to cat bond investors with price guidance in a range from 9.25% to 10%, but that also fell to a new range of 9% to 9.25% and we’re now told the pricing has been finalised at the low-end again, for a spread of 9%.

As a result, Nationwide will benefit from 50% more in reinsurance than it had originally targeted from this cat bond deal, with pricing below guidance for both of the tranches of notes, another example of strong execution.

You can read all about this new Aquila Re I Ltd. (Series 2024-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.