Galileo Re Ltd. (Series 2025-1)

AXA XL has returned to the catastrophe bond market for another international multi-peril cat bond transaction, seeking a per-occurrence based capital markets source of fully collateralized retrocessional reinsurance protection covering peak North American perils.

Bermuda based special purpose insurer Galileo Re Ltd. is targeting issuance of two tranches of Series 2025-1 notes, that will be sold to investors and the proceeds used to collateralize reinsurance agreements between the issuer and the ceding company, which is XL Bermuda Ltd.

The cat bond will also provide cover for AXA XL’s other underwriting entities, such as its Lloyd’s syndicate and other specialty re/insurance entities of the company, sources said.

As said, the initial target is to secure $175 million or greater in protection from this new cat bond deal, with the coverage set to run across a four-year term to the end of 2029 for both tranches that are being offered to investors.

That will protect AXA XL’s underwriting entities against losses from U.S., DC, Puerto Rico, and Virgin Islands named storm, as well as U.S. and Canada earthquakes, with differences in perils covered by each tranche of notes as detailed below, all on a per-occurrence and weighted industry loss index trigger basis.

Galileo Re Ltd. is offering an $85 million Class A tranche of Series 2025-1 notes that will provide AXA XL with coverage for losses from named storms only, across the regions mentioned.

The Class A notes will span a $100 million layer from a weighted industry loss trigger attachment index point of $1.047 billion, we understand, giving them an initial attachment point of 1.53%, an initial base expected loss of 1.39% and they are being offered to investors with price guidance in a range from 3.25% to 3.75%, we are told.

Galileo Re Ltd. is also offering a $90 million Class B tranche of Series 2025-1 notes that will provide AXA XL with coverage for losses from named storms and earthquakes, across the regions mentioned.

The Class B notes will span a wider $200 million layer from a weighted industry loss trigger attachment index point of $620 million, giving them an initial attachment point of 3.6%, an initial base expected loss of 2.95% and they are being offered to investors with price guidance in a range from 5.25% to 6%, sources said.

Update 1:

We’re told the size target for this issuance remains at $175 million for now, but the price guidance has been lowered.

The $85 million Class A tranche of Series 2025-1 notes are now offered with price guidance for a risk interest spread of 3% to 3.25%.

The $90 million Class B tranche of Series 2025-1 notes are now being offered with price guidance for a risk interest spread of 5% to 5.25%.

Update 2:

We’re told AXA XL secured the targeted $175 million of retrocession from this catastrophe bond issuance.

The $85 million Class A tranche of Series 2025-1 notes were priced with a spread of 3.25%, so at the bottom of initial guidance.

The $90 million Class B tranche of Series 2025-1 notes were priced with a risk interest spread of 5%, so below the initial guidance.