TD Insurance (TDI) has announced the successful sponsorship of its first catastrophe bond, Series 2025-1, marking a milestone in Canada’s insurance market. The bond provides TDI with CA$150 million in reinsurance capacity, transferring multi-year risk related to earthquakes and severe convective storms.
Proceeds from the bond are invested in CAD-denominated notes issued by the European Bank for Reconstruction and Development (EBRD). This issuance is the first catastrophe bond in Canada exclusively focused on domestic catastrophe risks.
Earlier this year, the company said it was planning to reduce the pricing for the catastrophe bond offering.
According to the Insurance Bureau of Canada, last year saw record-breaking insured losses from severe weather in Canada. TDI’s initiative aims to enhance its ability to address such risks.
“At TD Insurance, being there for our customers during their time of need remains our most important focus, and the issuance of a cat bond helps ensure we can continue to protect them when it matters most,” said James Russell, president and chief executive officer of TD Insurance. “At a time of increasing costs, we’re always looking for ways to provide the best possible pricing to our customers, and this new bond is another tool at our disposal.”
The Series 2025-1 bond, issued through MMIFS Re Ltd., offers reinsurance coverage for earthquake and severe convective storm events in Canada. The protection operates on an indemnity and per-occurrence basis for a three-year term, effective from January 17, 2025, to December 31, 2027.
The transaction was supported by joint bookrunners GC Securities, a capital markets and insurance-linked securities specialist unit of Guy Carpenter, and TD Securities. GC Securities also served as the sole structuring agent.
“We are proud to have served as joint bookrunner on this landmark catastrophe bond – the first of its kind in Canada, reflecting our commitment to delivering innovative solutions that address the evolving needs of clients and the market,” said Tim Wiggan, president and chief executive officer of TD Securities. “By leveraging capital markets to support resilience against natural disasters, we are helping to pave the way for a more secure future for Canadians and our clients.”
Peter Askew, president and chief executive officer of Guy Carpenter Canada, described the bond as a milestone for the Canadian reinsurance market. “As the first Canadian peril-focused catastrophe bond, this transaction opens the door for Canadian cedents to underwrite natural catastrophe risk with more confidence, while protecting policyholders’ interests,” he said.
TD Insurance includes Security National Insurance Company, Primmum Insurance Company, TD General Insurance Company, TD Direct Insurance Company, and TD Home and Auto Insurance Company. TD Securities is a subsidiary of The Toronto-Dominion Bank.
