Ariel Re returns to sponsor fourth Titania Re catastrophe bond

Global reinsurance firm Ariel Re is back in the catastrophe bond market for a fourth issuance in the Titania Re series of deals, targeting $100 million or more in multi-peril industry-loss triggered retrocession, through this Titania Re Ltd. (Series 2024-1) transaction.

Ariel Re brought its debut catastrophe bond to market in 2021, securing $150 million of retrocessional reinsurance protection from a multi-peril industry loss trigger Titania Re 2021-1 issuance at the mid-year.

The company followed up quickly with a second cat bond sponsorship that same year, getting $175 million of retro cover with a very similar Titania Re Ltd. (Series 2021-2) issuance in December 2021.

In early 2023, Ariel Re then secured a further $115 million in multi-peril industry-loss triggered retrocession, via a Titania Re Ltd. (Series 2023-1) deal.

Now back for its fourth cat bond issuance, Ariel Re is again using its Lloyd’s Syndicate 1910 as the ceding company, which is its main underwriting vehicle for its global reinsurance business, as it looks to secure additional capacity from the capital markets for retrocessional reinsurance protection.

For its fourth Titania Re cat bond, Ariel Re is once again seeking coverage for the same peak perils of named storm and earthquake risk across the US, Canada and related territories.

Bermuda domiciled special purpose insurer (SPI) Titania Re Ltd. is targeting issuance of two tranches of Series 2024-1 notes, which will be sold to investors and the proceeds used to collateralize a multi-year source of retro reinsurance for Ariel Re, covering certain losses from U.S. 50 state, Puerto Rico, U.S. Virgin Islands, D.C. and Canada named storms and earthquakes.

Both tranches of Titania Re 2024-1 notes will provide Ariel Re with annual aggregate retro protection, over a three year term.

Titania Re Ltd. is aiming to issue a $100 million or larger Class A tranche of Series 2024-1 notes that will have an initial attachment point at $2.85 billion of losses, with exhaustion set at $3.4 billion and a $200 million franchise deductible to be taken into account before losses can aggregate against them.

The Class A notes come with an initial attachment probability of 2.8%, an initial base expected loss of 2.38% and they are being offered to cat bond investors with price guidance in a range from 8% to 9%.

An as yet unsized Class B tranche of notes are riskier, attaching at $2.3 billion of losses and covering a share up to the $2.85 billion level, again with a $200 million franchise deductible enforced.

The Class B tranche of notes come with an initial attachment probability of 4.81%, an initial base expected loss of 3.97% and they are being offered to cat bond investors with price guidance in a range from 12.25% to 13.25%.

It is interesting to note that the novel carbon offset feature that Ariel Re added with its third Titania Re cat bond and received plaudits for, is now conspicuously absent from this new deal.

As you might expect, while these are notes that cover the entire US and Canada, the Class A tranche sees Florida named storm as 63.5% of its expected losses and the Class B tranche almost 60%.

It’s good to see Ariel Re looking to extend on its catastrophe bond coverage in 2024. The reinsurance firms’ $150 million Titania Re 2021-1 matures this year before wind season begins, so there is a good chance Ariel Re will look to secure as much protection as it can to replace that with this new cat bond deal.