Ariel Re Becomes First To Sponsor CAT Bonds With Carbon Offset Feature

Ariel Re Becomes First To Sponsor CAT Bonds With Carbon Offset Feature - Carbon Herald

Bermuda-based global reinsurer Ariel Re has successfully underwritten a $125 million catastrophe bond with a unique carbon offset feature.

Ariel says the third installment of Titania Re III from Titania Re Ltd will provide guaranteed reinsurance coverage for named storms and earthquakes in all US states, Puerto Rico, in the US Virgin Islands and Canada for a period of three years. The coverage will be provided for housing and commercial real estate, as well as vehicles that need to be replaced.

In a first for the catastrophe bond market, Ariel Re will seek to purchase carbon offset options from qualified providers to generate carbon credits.

There are currntly no regulations requiring replacements to reduce carbon emissions, so Ariel Re will use Titania Re III to mitigate this missed opportunity. The company will purchase carbon offsets which equal the benefit of rebuilding or replacing with alternatives that have lower carbon footprints.

Relevant: The European Central Bank To Decarbonize €387 Billion Of Corporate Bond Holdings

Ryan Mather, 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.”

The Cat Bond was successfully closed on February 23. Howden Tiger Capital Markets & Advisory acted as sole structuring agent and joint bookrunner and Aon Securities LLC acted as joint bookrunner.

Read more: The Guardian Investigation Of Verra Carbon Offsets Claims More Than 90% Are “Worthless”

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