RenRe raises Mona Lisa Re cat bond target to $125m, price guidance drops

In another signal that catastrophe bond market conditions have once again become more balanced, RenaissanceRe has raised the target size for its new industry-loss trigger Mona Lisa Re Ltd. (Series 2024-1) cat bond to $125 million, while at the same time the price guidance has fallen.

This is the first industry-index trigger catastrophe bond deal that looks set to price down in a number of weeks, as the spread widening that has most affected these structures has in general driven issuance pricing higher.

As we’ve been saying, first almost one month ago, a more stable market has been anticipated to emerge, as maturities over recent weeks were set to make the market flush with cash and we’re now seeing what could be the effect of this in recent issues.

Yesterday Achmea’s new cat bond saw its price guidance lowered, which was the first sign that the cash from maturities might be having some effect.

Now, RenaissanceRe’s new cat bond also hints at a stabilisation of supply and demand again, with investors having more firepower to support new deals at better pricing.

With this new Mona Lisa Re 2024-1 catastrophe bond, RenaissanceRe (RenRe) was originally seeking a $100 million three-year source of U.S., Puerto Rico, U.S. Virgin Islands, and D.C. named storm and earthquake protection, as well as protection for Canadian earthquakes.

As said, this cat bond features an industry loss index trigger, with PCS the reporting agency across personal, commercial and auto line losses, and the single tranche of notes will provide annual aggregate retro reinsurance to RenRe and its joint-venture reinsurance vehicle DaVinciRe.

We’re now told the offering looks set to increase to $125 million, at this time, with investor demand clearly more supportive now.

The now $125 million of notes being offered by Mona Lisa Re Ltd. come with an initial base expected loss of 2.22% and were initially offered to investors with price guidance in a range from 10.5% to 11.5%.

We’re now told that price guidance has been reduced to a range of 9.75% to 10.5%, suggesting pricing below the initial guidance is now possible.

So now we have two cat bonds that are showing signs of pricing down, one of which is index-triggered, right after a period where almost everything has priced up. Clearly those anticipated maturities have assisted in the market’s ability to clear deals, perhaps at better than guidance pricing.

Although we still need these deals to price, before we can call a halt to the upward price movements that had been seen.

You can read all about this Mona Lisa Re Ltd. (Series 2024-1) catastrophe bond from RenaissanceRe and every other cat bond ever issued in our extensive Artemis Deal Directory.