AXA XL lifts Galileo Re cat bond target to as much as $400m

AXA XL, the global specialty insurance and reinsurance unit of the AXA Group, has increased the target size for its new Galileo Re Ltd. (Series 2023-1) catastrophe bond issuance, with now up to $400 million in protection sought from the deal.

AXA XL returned to the catastrophe bond market for the first time since late 2019 recently, seeking $250 million or more in protection from this Galileo Re 2023-1 cat bond.

With this new cat bond, AXA XL is seeking coverage coverage for losses from U.S., DC, Puerto Rico, and Virgin Islands named storm, as well as U.S. and Canada earthquakes, all on a per-occurrence and weighted industry loss index trigger basis, with a Class A tranche of notes covering losses for four years from 2024 to the end of 2027, but a Class B tranche only covering a two year term to the end of 2025.

We’re now told that both tranches of notes could upsize, with the initial $250 million target now having grown to between $325 million and $400 million across the two tranches of cat bond notes being offered by Galileo Re.

Remember that with this deal, the only different in the notes is the tenure, it appears.

The Class A and Class B notes both have initial expected losses of 2.1% and were being offered with spread price guidance in a range from 6.5% to 7.25%, while the $250 million was not specified in terms of how it would be split across the tranches.

Now, we’re told that the four year Class A tranche is being targeted as $200 million in size, while the two year Class B tranche is targeted at between $125 million and $200 million, and the spread price guidance has now been fixed at 7% for each set of notes.

So, it does appear that AXA XL has found the catastrophe bond market’s pricing conducive enough to seek to upsize this transaction, another strong signal of the cat bond market’s capacity and price comparability proving attractive to sophisticated sponsors this year.

You can read all about AXA XL’s new Galileo Re Ltd. (Series 2023-1) transaction to our Deal Directory, where you can analyse details of almost every catastrophe bond ever issued.