Mapfre Re targets $100m US wind retro from debut Recoletos Re catastrophe bond

Spain headquartered global reinsurance company Mapfre Re has entered the catastrophe bond market for the first time, with a target to secure $100 million in annual aggregate US named storm retrocession from the capital markets with its debut Recoletos Re DAC (Series 2024-1) issuance, Artemis has learned.

Mapfre Re is the latest first-time cat bond sponsor to come to market and in this case the company is seeking annual aggregate retrocessional reinsurance protection against major US hurricane loss events.

Which is encouraging, as recent deals are showing that the cat bond market remains open to well-structured aggregate covers, something that could attract others to tap the market for retrocession over the coming months.

Mapfre Re has established an issuance vehicle in Ireland, named Recoletos Re DAC, we are told.

Recoletos Re DAC is targeted with the issuance of a single tranche of Series 2024-1 Class A notes, that will be sold to cat bond investors and the proceeds used to collateralize a retrocession agreement between the structure and the sponsor of the issuance, Mapfre Re.

We’re told the target is to secure at least $100 million of protection from the capital markets with this debut cat bond for Mapfre Re.

The notes will provide the reinsurance company with annual aggregate and territory weighted industry-loss triggered retro protection over a three calendar year term to the end of 2027, we understand.

The retrocession will provide Mapfre Re with protection against significant industry loss events caused by named storms in the United States and DC, sources explained.

The $100 million of Series 2024-1 Class A notes that Recoletos Re DAC is set to issue will come with an initial attachment point of 2.36%, an initial expected loss of 2.04% and are being offered to investors with spread price guidance in a range from 5.5% to 6.25%, we are told.

The notes would attach their coverage after losses during a single calendar year risk period reach at attachment point at 600 index point and exhaust coverage at 700, but for a named storm industry loss event to qualify it must drive a PCS loss of above $10 billion, it appears.

Which means this debut Recoletos Re catastrophe bond for Mapfre Re will protect the company against hurricane seasons with multiple significant landfall events.

Notably, while this is yet another US hurricane cat bond to come to market, this deal sees its largest exposure, in expected loss terms, in New York, sources told us. After which the states with the highest EL are Texas, Massachusetts, New Jersey and Florida.

So, the exposure profile is a little different to many US named storm cat bonds that came to market this year, which could help to make the notes perhaps more attractive to cat bond investors.

It’s encouraging to see another first time cat bond sponsor enter the market and especially so when it is a major global reinsurance player like Mapfre Re.

You can read all about this new Recoletos Re DAC (Series 2024-1) catastrophe bond and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory.