Nationwide Mutual Insurance Company has successfully secured the upsized target of $350 million of reinsurance from its new Aquila Re I Ltd. (Series 2026-1) catastrophe bond sponsorship, Artemis has learned.
In our first update on this deal, we reported that Nationwide raised the target size to seek between the initial $200 million and as much as $325 million of reinsurance from this transaction, while the price guidance was also adjusted for both of the tranches of notes on offer.
In a second update we reported that Nationwide had increased the target size a little further, to seek between $325 million and as much as $350 million of reinsurance, while the price guidance was lowered once again for both of the tranches of notes on offer.
Now, we’re told that Nationwide Mutual has priced the notes to successfully secure the upsized $350 million of reinsurance from this new Aquila Re I Series 2026-1 catastrophe bond, while securing the coverage at the low-ends of reduced price guidance.
This new Aquila Re I deal set to become the eleventh Nationwide sponsored catastrophe bond issuance that we have listed in our extensive Artemis Deal Directory.
Nationwide’s $300 million Aquila Re I 2023-1 catastrophe bond will mature this June, so we now know that this new issuance will more than replace that expiring capital markets backed reinsurance for the insurer.
With the two tranches of Aquila Re I Series 2026-1 cat bond notes now priced, we know that this new cat bond sponsorship with provide Nationwide Mutual with $350 million of protection against losses from the perils of US named storm, earthquake, severe thunderstorm, winter storm, wildfire, meteorite impact, volcanic eruption.
The Aquila Re I Series 2026-1 cat bond notes $350 million of protection will run across a four-year term, from June 2026 to the end of May 2030, which is notable as being a longer tenure of coverage than its last two cat bonds that only had three-year terms.
The Class A-1 notes from this new issuance were initially $100 million in size, which was later lifted to between the initial $100 million and as much as $190 million and were finalised to provide the upper $190 million of reinsurance protection.
These Class A-1 notes come with an initial base expected loss of 0.52%, and they were first offered to cat bond investors with price guidance in a range from 4% to 4.75%, which was then updated to a tighter spread of between 3.75% to 4%, but then the price was updated again to between 3.5% and 3.75%. We’re now told final pricing was for a risk interest spread of 3.5%, so the lowest-end of reduced guidance.
The Class B-1 tranche of notes were also initially $100 million in size, which was later lifted to as much as $135 million in size, but then lifted again to target between $135 million and as much as $160 million of reinsurance. We now understand Nationwide finalised these notes at the $160 million upper-size for more reinsurance protection.
The Class B-1 notes come with an initial base expected loss of 1.24%, and they were originally offered to cat bond investors with price guidance in a range from 4.75% to 5.5%, which was later updated to a tighter spread of between 4.5% to 4.75%, then fell again to between 4.25% and 4.5%. Sources said the final pricing for these notes was at a risk interest spread of 4.25%, again the lowest-end of reduced guidance.
So Nationwide Mutual has found catastrophe bond market conditions conducive, securing more reinsurance than initially targeted at far better than the initial price guidance.
Nationwide Mutual now looks set to grow its catastrophe bond backed reinsurance from $525 million to $575 million with this new issuance and after its 2023 cat bond matures.
As a reminder, you can read all about this new Aquila Re I Ltd. (Series 2026-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.
