RenaissanceRe is targeting an increased issuance size for its latest catastrophe bond, with the company now seeking 67% more multi-peril reinsurance protection from the new Mona Lisa Re Ltd. (Series 2021-1) transaction, at reduced pricing compared to initial guidance.
Bermuda-headquartered global reinsurance form RenaissanceRe (RenRe) brought its latest catastrophe bond transaction to market earlier this month, with its Mona Lisa Re vehicle aiming to offer a $150 million single tranche of notes to cat bond investors.
With cat bond market conditions strong and capacity among its investors and funds growing, RenRe is set to benefit from this, as we’re told the deal is likely to now upsize by 67% to a $250 million issuance.
As a result, this Mona Lisa Re 2021-1 cat bond will provide $250 million of collateralized retrocessional reinsurance cover for RenRe and its DaVinci Re Ltd. vehicle, a third-party capital backed equity-based joint-venture reinsurer operated by the company.
The $250 million of retro reinsurance will provide RenRe, DaVinci Re and affiliates with a four year source of collateralized protection against losses from U.S., Puerto Rico, U.S. Virgin Islands and D.C. named storms and earthquakes, as well as Canada earthquakes, on an industry loss trigger and annual aggregate basis.
The now $250 million of Series 2021-1 Class A notes to be issued by Mona Lisa Re will have an initial expected loss of 3.71%. When the deal was smaller at its launch to investors, the notes were offered with coupon spread guidance of 7.5% to 8.25%.
Now, we’re told by sources that the spread guidance has been reduced, with the range now marketed at 7% to 7.5%.
Should this cat bond deal close at the revised mid-point, that would represent a roughly 8% drop in coupon pricing from the initial mid-point of guidance, which alongside the increased size would be a good result for its sponsor.