Ariel Re, the Bermuda headquartered global reinsurer, is back in the catastrophe bond market this time seeking to add wildfire as a covered peril, as it brings a new $125 million transaction to build out its capital markets backed retrocessional reinsurance, Artemis can report.This will be the fifth Titania Re catastrophe bond to benefit Ariel Re since the firm’s debut back in 2021.Since then, Ariel Re has secured $775 million of retro reinsurance with a focus on north American named storm and earthquake protection..

Currently Ariel Re has $450 million of catastrophe bond supported retro reinsurance outstanding, with none of that due to mature this year meaning this new deal should increase that figure and .As with all of Ariel Re’s catastrophe bonds, once again the firm’s Lloyd’s Syndicate 1910 is the ceding company to this new deal, while Bermuda based special purpose insurer (SPI) Titania Re Ltd.will be the issuer.

Where its previous catastrophe bonds have all covered the peak perils of U.S.50 state, Puerto Rico, U.S.Virgin Islands, D.C.

and Canada named storms and earthquakes, for the first time Ariel Re has added wildfire risks to this new cat bond, seeking coverage across the US and District of Columbia.Titania Re will issue two tranches of Series 2025-1 notes that will be sold to cat bond investors and the proceeds will collateralize the reinsurance agreements between the issuer and the ceding insurer Syndicate 1910.We’re told the two tranches of notes will both provide Ariel Re with annual aggregate and industry loss triggered retro protection, over a four year term and four aggregate risk periods.

The target is to secure at least $125 million of protection from these notes, while each tranche will also have room to upsize, should investor appetite prove strong and Ariel Re opt to take advantage of that to further build on its protection.Titania Re Ltd.is looking to issue a $50 million or larger Class A tranche of Series 2025-1 notes that will have an initial attachment point at $2.5 billion of losses, with exhaustion set at $2.8 billion (remember those are weighted industry-loss index figures).

There will be a $75 million franchise deductible for named storm and earthquake losses to qualify and $187.5 million for wildfires before they will be taken into account to aggregate against them.There is also a wildfire contribution cap at $1.25 billion.The Class A notes come with an initial attachment probability of 2.54%, an initial base expected loss of 2.25% and they are being offered to cat bond investors with price guidance in a range from 6.75% to 7.25%.

Also being offered are a $75 million Class B tranche of Series 2025-1 notes, which will have an initial attachment point at $1.3 billion of losses, with exhaustion set at $1.6 billion, so are riskier. There will be a $75 million franchise deductible for named storm and earthquake losses to qualify and $187.5 million for wildfires again.But for the Class B notes the wildfire contribution cap is lower at $650 million.The Class B notes come with an initial attachment probability of 7.35%, an initial base expected loss of 6.35% and they are being offered to cat bond investors with price guidance in a range from 15.75% to 16.5%.

It’s good to see Ariel Re looking to expand the coverage its catastrophe bonds provide and with a structured aggregate approach with a contribution cap, it will be interesting to see how cat bond investors respond to this opportunity.You can read all about this new catastrophe bond from Ariel Re, as well as details on over 1,000 other cat bond transactions in the extensive Artemis Deal Directory..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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