MAPFRE RE successfully structures its first reinsurance protection linked to a catastrophe bond

MAPFRE RE has sponsored the issuance of a catastrophe bond for the first time in its history. The bond has been issued by Recoletos Re DAC, a special purpose vehicle (SPV) incorporated in Ireland, to provide a multi-year protection from January 2025 to December 2027, aiming at enhancing MAPFRE RE’s retrocession protection.

Catastrophe bonds are financial instruments that offer collateralized protection to insurers and reinsurers as an alternative to traditional reinsurance.

The first issuance under this retrocession program, Series 2024-1, provides the Spanish reinsurer with protection against its catastrophic exposure to tropical storms and hurricanes in the United States, based on reported industry losses from such events and on an annual aggregate basis.

AON Securities was the structuring agent of the bond, working jointly on the placement with GC Securities.

The capital markets received this inaugural operation very positively. The bond was upsized to USD $125 million from an initial USD $100 million, and with reduced pricing, due to the strong investor demand.

“We’re very satisfied with this new protection because it enables us to expand our business in the United States and diversify our sources of reinsurance, which strengthens our position in the global market.” explains Miguel Rosa, CEO of MAPFRE RE.

Catastrophe bonds are an additional and complementary reinsurance protection alternative for insurance and reinsurance companies and serve as an interesting investment option for large capital market investors, who can access attractive returns in a diversifying asset class without having to constitute their own insurance vehicle.