By Chris Munro

Jan 24 - (The Insurer) - TD Insurance has become the first ever Canadian insurer to sponsor a catastrophe bond focused solely on perils within the country after the Toronto-based firm secured C$150mn ($105mn) of multi-year coverage from the insurance-linked securities (ILS) market.

The groundbreaking coverage is provided through the MMIFS Re Ltd-issued Series 2025-1 cat bond and will provide protection for earthquakes and severe connective storms in Canada on an indemnity and per-occurrence basis over a three-year term effective 17 January 2025, through to 31 December 2027.

“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, TD Insurance’s president and CEO.

“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,” Russell added.

TD Insurance, a subsidiary of Canadian financial services firm TD Bank Group, is the collective name given to Security National Insurance Company, Primmum Insurance Company, TD General Insurance Company, TD Direct Insurance Company and TD Home and Auto Insurance Company.

TD Insurance has turned to the catastrophe bond market as the company counts the cost of what was a heavy loss year in 2024.

As The Insurer has previously reported, Canada’s insurers were hit with a record C$8.5bn-plus of catastrophe losses in 2024, the bulk of which came from four events - a wildfire in Jasper, a hailstorm in Calgary and separate flooding events in Quebec and southern Ontario - that struck over fewer than 30 days during the summer.

TD Insurance was not immune from those losses. As this publication reported in November, parent TD said its wealth management and insurance segment was hit with C$388mn of catastrophe losses, pre-tax and net of reinsurance, during the company’s fourth quarter – a period that runs from 1 August through to 1 November.

In TD’s Q3 2024, which ran from 1 May through to 31 July, its wealth management and insurance segment booked C$186mn of catastrophe claims, pre-tax and net of reinsurance.

Including the bank’s estimate for the fourth quarter of this year, during its financial year 2024, TD booked C$591mn of catastrophe losses.

In securing the cat bond coverage, TD Insurance was advised by joint bookrunners Guy Carpenter’s GC Securities and TD Securities. GC Securities also served as the transaction’s sole structuring agent.

“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,” said Peter Askew, president and CEO of Guy Carpenter Canada.

“It marks a significant milestone in the Canadian reinsurance market,” Askew declared.

The catastrophe bond’s proceeds are invested in Canadian dollar denominated European Bank for Reconstruction and Development (EBRD) notes.

“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 CEO 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,” Wiggan added.