TD Insurance (TDI) has completed its second catastrophe bond, securing CA$115 million in aggregate reinsurance protection against multiple natural disaster perils in Canada.
The Series 2026-1 cat bond, issued through MMIFS Re Ltd., covers named storms, earthquakes, severe convective storms, winter storms, and wildfires.
The protection is structured on an indemnity and annual aggregate basis over a three-year term, effective January 9, 2026, through December 31, 2028.
TDI became the first Canadian insurer to sponsor a catastrophe bond focused solely on Canadian perils in 2025. That debut transaction, the Series 2025-1 bond, provided C$150 million in coverage for earthquakes and severe convective storms on a per-occurrence basis.
The second issuance expands peril coverage to include named storms, winter storms, and wildfires, while shifting to an annual aggregate structure.
The latest bond carries an initial expected loss of 1.96% and priced at a risk spread of 6.75% - higher than the debut bond, which had an expected loss of 0.42% and priced in the range of 3.25% to 3.75%.
TDI's debut cat bond faced hurdles due to Canadian regulatory requirements around collateralized reinsurance structures. Under these rules, investor proceeds must be invested in Canadian dollar-denominated funds that are both highly liquid and high quality – a relatively scarce combination.
TDI ultimately settled on notes from the European Bank for Reconstruction and Development as a solution, a structure it has maintained for the second issuance.
The transaction comes as Canadian insurers grapple with escalating catastrophe costs. According to the Insurance Bureau of Canada, insured damage from severe weather events in Canada surpassed CA$8 billion for the first time in 2024, reaching CA$8.5 billion – far exceeding the previous record of CA$6.2 billion set in 2016.
The losses were heavily concentrated in the summer months. In July and August alone, four catastrophic weather events resulted in over CA$7 billion in insured losses and more than 250,000 insurance claims – 50% more than Canadian insurers typically receive in an entire year, according to the bureau.
The single most destructive event was an August hailstorm in Calgary, Alberta, which caused CA$3 billion in insured losses in just over an hour.
Losses have accelerated sharply over the past decade. Between 2006 and 2015, Canada's annual insured losses from catastrophic weather and wildfires totaled CA$14 billion. Between 2016 and 2025, that figure nearly tripled to CA$37 billion, according to the Insurance Bureau of Canada.
James Russell (pictured above), president and CEO at TD Insurance, said the cat bond supports the company's ability to manage costs associated with natural disasters.
"Through this second catastrophe bond, we're able to help manage rising costs of these events to provide the most competitive pricing possible for our clients," Russell said.
