Nationwide Mutual targets upsized $225m protection from Aquila Re I cat bond

U.S. primary insurer Nationwide Mutual Insurance Company has raised the target for its latest catastrophe bond, with now up to $225 million in multi-peril reinsurance sought from this new Aquila Re I Ltd. (Series 2024-1)  transaction, Artemis has learned.

Nationwide Mutual returned to the catastrophe bond market earlier this month, with what will be the second takedown under the Aquila Re I Ltd. special purpose insurer.

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

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

Now, we’re told the target size has risen, with up to $225 million in reinsurance now being sought across the two tranches of Aquila Re I 2024-1 cat bond notes that are being offered.

At the same time, we’re also told that the price guidance for both of the tranches of notes on offer has fallen to below the initial ranges.

The 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 are now targeted at up 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 has now dropped to a new range of 5.5% to 6%, we understand.

The Class B-1 tranche of notes were preliminarily sized at $50 million but are now offered at $100 million in size, sources said.

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 again that has fallen to a new range of 9% to 9.25%.

So Nationwide looks set to benefit from more reinsurance than it had originally targeted from this cat bond deal, priced at the bottom-end of guidance or lower, a strong result for the carrier.

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.