Tokio Marine & Nichido Fire Insurance Co. Ltd., the large Japanese major insurance coverage group, has returned to the disaster bond market looking for issuance of a $100 million Kizuna Re III Pte. Ltd. (Series 2024-1) transaction, that’s being issued out of Singapore to offer the corporate with collateralized earthquake reinsurance safety.
Tokio Marine has really been a sponsor of disaster bonds since proper again in 1997, when the agency introduced the appropriately named Parametric Re Ltd. to market.
For its latest disaster bond, the Japanese insurance coverage service is for the second time sponsoring a Kizuna Re disaster bond issuance out of Singapore, sources have advised us.
As an Asian cat bond sponsor, bringing Asian danger to market, the usage of the Singapore based mostly particular objective reinsurance car (SPRV) will doubtless carry some advantages to Tokio Marine, presumably permitting it to qualify for the Monetary Authority of Singapore’s ILS grant program providing.
Kizuna Re III Pte. Ltd. is looking for to challenge a single Class A tranche of Series 2024-1 notes, that will likely be offered to traders and the proceeds used to collateralize underlying reinsurance agreements between the issuer and Tokio Marine & Nichido Fire Insurance.
The goal dimension for this issuance is at the least $100 million, we’re advised, whereas the reinsurance protection will likely be in opposition to losses from Japanese earthquakes, together with losses from associated impacts brought on by shake, tsunami, hearth, flooding, dam rupture and sprinkler leakage and protecting such occasions as sea quakes and seismic volcanic disturbances or eruptions.
As with the Japanese insurers’ final disaster bond, this new Kizuna Re III 2024-1 cat bond will present reinsurance protection to a portfolio of Tokio Marine & Nichido Fire’s business, together with business, private and industrial property insurance policies, private accident, car losses, and sure reinsurance assumption between the cedant and group corporations.
Coverage from this new cat bond will likely be on a three-year rolling mixture and indemnity set off foundation, throughout a 5 yr time period.
This is identical as Tokio Marine’s different recent Kizuna cat bonds, the place the transactions are structured with three, three-year mixture danger durations, that overlap throughout the complete five-year time period of the reinsurance protection. As a consequence, maturity for this new deal is slated for early April 2029.
We perceive there’s a franchise deductible per-earthquake occasion that qualifies below the phrases of the deal of JPY 40 billion, whereas the attachment level for the primary of the three-year danger durations is JPY 52.5bn, protecting a share of losses as much as JPY 232.5 billion.
It’s price noting that the earthquake franchise deductible is larger than the JPY 25 billion from the 2021 Kizuna Re cat bonds, however the first attachment level is definitely the identical.
The $100 million of Series 2024-1 Class A cat bond notes that Kizuna Re III Pte. Ltd. will challenge include an preliminary attachment chance of 5.57% on a three-year foundation (1.86% annualised) and an preliminary anticipated lack of 1.59% on a three-year foundation (0.53% annualised), we perceive
We’re advised the $100 million of notes are being provided to disaster bond traders with pricing steerage of two.75% to three.25%.
For comparability, the 2021 Kizuna quake cat bond from Tokio Marine has an preliminary annualised anticipated lack of 0.33% and priced with a 2% unfold.
It’s good to see extra Japanese danger coming to market, providing a real diversification alternative for cat bond traders and that is additionally the primary cat bond timed for across the Japanese reinsurance renewal date of April 1st.
It’s unlikely to be for everybody, given the very low spreads on provide (as is typical with Japanese quake danger offers), however for some the prospect to diversify their portfolios will likely be very welcome.
As an extra reminder, Tokio Marine and Nichido Fire additionally sponsored a Japanese storm and flood disaster bond in 2021, the Umigame Re Pte. Ltd. (Series 2021-1) deal that was additionally issued out of Singapore.
You can learn all about this new Kizuna Re III Pte. Ltd. (Series 2024-1) disaster bond transaction and each different Tokio Marine sponsored cat bond in our Artemis Deal Directory.
