After securing its debut catastrophe bond, the $150 million MMIFS Re Ltd. (Series 2025-1) issuance in January, TD Insurance is signalling a long-term commitment to the cat bond market as the company is looking ahead to future issuances as part of a broader reinsurance strategy, according to President and CEO, James Russell.
The MMIFS Re 2025-1 issuance marked the first cat bond solely exposed to Canadian natural perils and the first from a Canadian sponsor, that we’ve ever analysed and tracked in our extensive Deal Directory.Speaking during a recent webinar hosted by Morningstar DBRS, Russell made it clear that this inaugural issuance is just the beginning.
“We’re always looking for innovative ways to be there for our clients, and I’d say, with the increasing frequency and severity of climate-related events, we’ll continue to explore options towards more resilient ways to manage our financial impacts,” Russell said.
He continued: “So I would say, it is highly likely as we go into the future, I mean this is something that we aren’t really thinking of a once and done. I think there’s a lot of great options that are opened up to us as we think about cat bonds in the future. Again, it’s a three year deal, and I think we will be looking to other cat bonds in the future.
“I think it’s been highly successful. The team did a fabulous job in placing this into the market, and I’d like to see us do more in the future.”
Additionally, Russell also discussed how the MMIFS Re 2025-1 cat bond drew notable attention from the investor community, marking a significant step in broadening market interest beyond US and European risks.
“Having a Canadian footprint really provides diversification benefits to investors and cat bond funds against the peak of US earthquake, or hurricane, or European wind storm, and being the first from Canada it creates an opening for future investments from TD Insurance or from peers, and investors really recognise that in their acceptance of the price. And the risk spread we see is within the range of other recent cat bond issues in the US with a similar likelihood of payout from a modeling perspective.”
Investor appetite also played a key role in favourable pricing, with the final risk spread placement for the issuance coming in well below the initial guidance.
“We did receive an overwhelming positive response from investors and reinsurance partners on the cat bond. And what I think is important to highlight is that the cat bond not only benefits our business and our clients, but it has benefits for our investors as well. And we had really a tone of great interest from our investors when we first went to market,” said Russell.
“For instance, the initial price guidance for the risk spread was 3.25% to 3.75%. Because of the positive investor interest that we had, the risk spread was lowered and finally placed at the lower end of the price guidance, which is 2.9%, and it was roughly a 17% drop in the spread from the midpoint of the initial price guidance.”
As climate risks continue to grow more frequent and severe, TD Insurance’s move into the catastrophe bond space reflects a broader industry shift toward innovative, market-based solutions. And with Russell signaling more to come, it appears that the insurer is positioning itself as a long-term player in the evolving ILS market.
As a reminder, you can read all about this MMIFS Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.
