MS&AD gets upsized $200m Tomoni Re cat bond priced at mid-points
MS&AD Insurance Group Holdings has now secured the upsized $200 million in multi-year and multi-peril Japanese catastrophe reinsurance protection from its new Tomoni Re Pte Ltd. (Series 2024-1) catastrophe bond issuance, with the notes priced at the mid-points of the initial guidance, Artemis has learned.
The Japanese insurance group returned to the catastrophe bond market earlier this month, seeking reinsurance coverage across three Japanese perils, on both a per-occurrence and aggregate basis with this new Tomoni Re cat bond deal.
With this transaction, Singapore based special purpose reinsurance vehicle Tomoni Re Pte Ltd. will issue two tranches of Series 2024-1 catastrophe bond notes, one to secure reinsurance protection for ceding insurer Mitsui Sumitomo Insurance Co. Ltd. and the other for Aioi Nissay Dowa Insurance Co., Ltd.
At first, the target size for this cat bond issuance was to secure $175 million of collateralized reinsurance protection for the Japanese insurance carriers.
As we then reported earlier today, the target was lifted with more protection being sought for Mitsui Sumitomo, making the offering $100 million across each tranche.
We’re now told that, with the notes having priced today, that is where the offering will settle.
So, a now $100 million Class A tranche of notes (that was $75 million at launch) will provide Mitsui Sumitomo Insurance Co. Ltd. with a four-year source of Japanese typhoon and Japanese flood reinsurance protection, on an indemnity and per-occurrence.
The now confirmed as $100 million of Class A notes come with an initial expected loss of 1.45%. They were initially offered to cat bond investors with spread guidance in a range from 3% to 3.5%, which was later narrowed to 3% to 3.25%, but we’re now told the notes have priced for a spread of 3.25% to be paid to investors.
The $100 million Class B tranche of Series 2024-1 notes that Tomoni Re Pte Ltd. is issuing will protect insurer Aioi Nissay Dowa Insurance Co., Ltd. with a source of both per-occurrence and aggregate reinsurance coverage.
The $100 million tranche of Class B notes will provide indemnity and per-occurrence reinsurance for Japanese typhoons and floods over the four year term, and also rolling 3-year aggregate reinsurance for Japanese earthquake losses as well.
The aggregate cover therefore features two 3-year risk periods across the four-year term, with a JPY 80 billion franchise deductible for earthquakes to qualify under it.
Because of the two-section coverage approach for the Class B notes, they have both occurrence and aggregate metrics, with an initial expected loss of 1.31% on the occurrence wind and flood side, and an initial expected loss of 0.32% on the quake side.
The combined metrics for the Class B notes are an initial expected loss of 1.6%. These notes were first offered to cat bond investors with price guidance in a range from 3.75% to 4.25%, which was later fixed at 4%, so the mid-point of the initial range, and this is where we’re now told the $100 million of Class B notes have been priced.
This is now the third cat bond issuance in a row from the MS&AD group insurers to have been issued out of Singapore and the second cat bond from this Tomoni Re Pte issuer.
So, it’s encouraging to see Singapore continuing to renew catastrophe bonds from regional sponsors and for MS&AD Holdings to continue relying on the catastrophe bond market as a reliable source of multi-year reinsurance protection.
You can read all about this new Tomoni Re Pte Ltd. (Series 2024-1) catastrophe bond and every other cat bond transaction ever issued in the extensive Artemis Deal Directory.
