Ariel Re’s ‘environmentally-friendly’ cat bond Titania Re III has innovative carbon offset feature

Multi-line reinsurer  Ariel Re has secured its new catastrophe bond with a “first-of-its-kind” carbon offset feature, but at reduced pricing than its previous bonds.

Titania Re III, the third issuance from Titania Re (Series 2023-1 Notes) will provide $125 million of collateralised 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.

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

Titania Re III is the third cat bond which Ariel Re has sponsored since the initial Titania Re deal in 2021 for $150 million, followed by $175 million Series 2021-2 Notes.

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.

Ariel Re said there is no rule that requires replacements to have lower carbon emissions, so the company is using Titania Re III “to mitigate this 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.

Ryan Mather (pictured), chief executive officer 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, added: “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.”

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