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Nationwide secures $300m Aquila Re I cat bond at below-guidance pricing


U.S. primary insurer Nationwide Mutual Insurance Company has now secured a doubling in size of its new catastrophe bond, with the Aquila Re I Ltd. (Series 2023-1) transaction set to provide the insurer $300 million of multi-peril reinsurance, while pricing of all the notes was finalised at levels below the initial spread guidance.

nationwide-mutual-logoNationwide Mutual Insurance Company has been a sponsor of catastrophe bonds since as far back as 2008.

We have nine Nationwide Mutual sponsored catastrophe bond issues, all under a range of Caelus Re names, listed in our extensive Deal Directory and now this first Aquila Re I Ltd. cat bond as well.

Nationwide returned to the cat bond market around the middle of April, seeking $150 million in multi-peril US catastrophe reinsurance coverage through this Aquila Re I Ltd. Series 2023-1 deal.

As we later reported, the target size was lifted significantly, with a doubling possible to provide Nationwide with $300 million of collateralized reinsurance from this new catastrophe bond.

We’re now told by sources that the Aquila Re I 2023-1 catastrophe bond has been priced and Nationwide has secured the doubling in size, with the deal now set to provide it $300 million of multi-year reinsurance protection.

So, the Aquila Re I 2023-1 catastrophe bond will provide Nationwide Mutual and subsidiaries, including auto insurer Titan Insurance Company, with $300 million of capital markets backed reinsurance, against losses from multiple U.S. perils, including U.S. named storm, earthquake, severe thunderstorm, winter storm, wildfire, meteorite impact, and volcanic eruption.

This $300 million of reinsurance will run across three layers of notes issued, with each structured on an indemnity trigger and per-occurrence basis, to provide Nationwide reinsurance across a three-year term to the end of May 2026.

At the deals launch, all three tranches of cat bond notes on offer were preliminarily sized at $50 million.

We now understand that, the Class A tranche of notes settled at $50 million in size, with pricing finalised below-guidance at 5.25%, the Class B tranche of notes settled at $125 million in size, again with pricing finalised below-guidance at 7.5%, and the riskiest Class C tranche of notes settled at $125 million in size, with their pricing also finalised below-guidance at 9.25%.

That represents an average price decrease of 11%, across the three tranches from their initial launch price guidance, or roughly 14% for the Class A tranche, 10% for Class B and 9% for Class C.

So, a doubling in size of the coverage secured, while benefiting from pricing settling on average 11% below the initial pricing mid-points, a particularly strong result for Nationwide Mutual from its latest catastrophe bond sponsorship.

You can read all about this new Aquila Re I Ltd. (Series 2023-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.

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