RenRe’s Mona Lisa grows to $150m. Price drops 11%, as cat bond market stabilises
RenaissanceRe has increased the target size of its new industry-loss trigger Mona Lisa Re Ltd. (Series 2024-1) catastrophe bond for a second time, with $150 million of retrocessional protection now sought, while the price guidance has been fixed below the initially marketed range.
It’s a further signal of the stabilisation of cat bond market conditions over the last week or so, as cash generated from recent maturities is now being leveraged to deliver better execution for cedents, it appears.
As we’ve been explaining, since almost one month ago, a more stable cat bond market has been expected, as maturities over recent weeks were set to furnish the market and cat bond investors with cash, with the effects of this now evident in the execution of recent issues.
The new Mona Lisa Re cat bond from RenaissanceRe shows that the market has experienced a stabilisation of supply and demand again, with investors having more firepower to support these new deals (even industry index trigger based) at better pricing.
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 retro reinsurance protection, as well as protection for Canadian earthquakes, with this new Mona Lisa Re 2024-1 catastrophe bond.
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.
As we reported yesterday, we had learned that this offering was targeted with an increase to $125 million, while the price guidance was lowered to a new range below the original, as investor demand appeared clearly more supportive than just a week or two ago for this deal.
Now, we’ve learned that RenRe’s target size for this new Mona Lisa Re 2024-1 cat bond has risen again, with now $150 million of protection being sought from the deal.
While, at the same time, we’re now told the price guidance has been fixed at the bottom of the reduced range, indicating a roughly 11% decline in price from the mid-point of initial guidance and a strong result ahead for RenRe.
The $150 million of notes now 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%.
That price guidance was first reduced to a range of 9.75% to 10.5% and we’ve now learned that the pricing has been fixed at 9.75%, so the bottom of the reduced range and 11% below the initial mid-point.
Which would have been a strong result for RenRe right back two months ago before the spread widening began in the catastrophe bond market.
It’s quite amazing how quickly this market reacts to liquidity and the availability of cash managers have to deploy, which reflects the still very attractive spread levels that have persisted through 2024 so far (despite the swings down and up).
It seems we can now call a halt to the upward price movements that had been seen while spreads were widening, with stabilisation now apparent.
This presents an opportunity for any sponsors that might choose to come to market for retro protection before the peak of the wind season, so it will be interesting to see if this strong example of cat bond deal execution can tempt any other cedents to come forward.
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.
