Galileo Re Ltd. (Series 2026-1)

AXA XL has returned to the catastrophe bond market for additional fully collateralized retrocessional reinsurance protection, with a Galileo Re Ltd. Series 2026-1 issuance that we understand was relatively privately marketed and placed.

This more privately offered Galileo Re Series 2026-1 cat bond is less typical for the sponsor, but perhaps reflects its appetite to capitalise on pricing conditions in the capital markets to lock-in additional hedging capacity.

AXA XL has utilised its typical Bermuda based special purpose insurer for this catastrophe bond, with Galileo Re Ltd. the structure used to issue the notes, we are told.

Galileo Re Ltd. offered a single Class A tranche of Series 2026-1 cat bond notes to investors, with the proceeds to be used to collateralize a retrocessional reinsurance agreement between the issuer and the ceding company, which we understand to be XL Bermuda Ltd.

AXA XL’s other recent cat bonds have also provided protection to other underwriting entities, such as its Lloyd’s syndicate and other specialty re/insurance entities of the company, so it’s possible this Series 2026-1 issuance does as well.

We don’t know too much about the coverage these notes will provide, given the privately placed nature of the cat bond deal.

But we are told they feature an industry loss index trigger, which would make sense given that is how AXA XL tends to access limit from the cat bond market.

We do not know if they are occurrence or aggregate, in form of coverage, or what perils they will cover for the re/insurer. AXA XL’s cat bonds have covered North American peak perils in some cases, but in others they have featured European and further afield peak catastrophe exposure as well, so it’s hard to know at this time.

The $67.5 million of notes that are now set to be issued will provide AXA XL with industry loss based retrocessional protection over an almost two year term, with maturity due in early June 2028, sources said.

The $67.5 million of Galileo Re 2026-1 Class A notes were priced to pay investors an initial risk interest spread of 6%, we are told.