Ariel Re closes first cat bond with carbon offset feature


Ariel Re closes first cat bond with carbon offset feature

Ryan Mather, CEO of Ariel Re

Ariel Re has completed its third cat bond – and included an innovative first-of-its-kind carbon offset feature whereby it will buy carbon offset options in the event of a significant event.

Titania Re III, the third issuance from Titania Re (Series 2023-1 Notes), provides Ariel Re with $125 million of collateralized reinsurance cover for named storms and earthquakes in all US states, Puerto Rico, the US Virgin Islands and Canada with an industry loss trigger over three years.

In a first for the cat bond market, Ariel Re will seek to buy carbon offset options from a qualified provider to generate carbon credits in the event of a significant hurricane or earthquake that requires a large number of homes, commercial properties and vehicles to be replaced.

There is no rule that requires replacements to have lower carbon emissions, so Ariel Re is using Titania Re III to mitigate what it calls a missed opportunity and buy carbon offsets equivalent to the benefit that would have come from rebuilding or replacing buildings and vehicles with those which have a less damaging carbon impact.

Titania Re III is the third cat bond which Ariel Re has sponsored since the initial Titania Re deal in 2021.

Ryan Mather, CEO of Ariel Re, said: “Ariel Re is extremely proud to have
sponsored our third cat bond with a new feature relating to carbon offsets. Our vision is to be the premier manager of reinsurance risk, and launching environmentally-friendly initiatives such as Titania Re III for the building back of business and communities in the wake of natural disasters shows that we can be innovative in the reinsurance solutions we provide to our clients.”

Matthew Twilley, head of ceded at Ariel Re, said: “While there is no directive to build back greener, Ariel Re is taking the initiative to help people and businesses to get back on their feet after natural disasters in a way that reduces the harm done to the planet. We want to do good while helping others to do well.”

The cat bond was closed on February 23, 2023. Howden Tiger Capital Markets & Advisory acted as sole structuring agent and joint bookrunner, with Aon Securities acting as joint bookrunner.

Ariel Re, Appointment, Cat bond, Carbon, Insurance, Reinsurance, Bermuda

Bermuda Re