Nakama Re Pte. Ltd. (Series 2025-1)

The Japanese National Mutual Insurance Federation of Agricultural Cooperatives, or Zenkyoren, is back in the catastrophe bond market with an initial target to secure $100 million or more in aggregate Japanese earthquake reinsurance protection from the capital markets.

This will be Zenkyoren’s fifteenth catastrophe bond that we have analysed and tracked since 2003 and the eleventh under the Nakama Re name, as well as its third to use Singapore as a domicile.

Singapore based structure Nakama Re Pte. Ltd. is targeting the issuance of a single tranche of Series 2025-1 Class 1 notes, through which the target is to raise at least $100 million in capital to collateralize a reinsurance agreement between the issuing vehicle and cedent Zenkyoren, we understand.

As with previous Nakama Re cat bonds, Zenkyoren is again seeking Japanese earthquake reinsurance protection structured on a three-year aggregate, indemnity triggered basis. With the full term of coverage set to run across five years, to mid-April 2030, across three annual aggregate risk periods, each three-years in length, that overlap across the full term.

Again, like its other recent catastrophe bonds, Zenkyoren seeks reinsurance protection that includes coverage for losses from Japanese earthquake shake and related perils, including tsunami’s, fire, flooding and sprinkler leakage, we are told.

The targeted $100 million tranche of Series 2025-1 Class 1 notes that Nakama Re Pte. is offering will have an initial attachment point of JPY 2.15 trillion of losses and cover a layer to JPY 2.4 trillion, which is a layer above Zenkyoren’s 2023 and 2024 cat bonds, but sits next to a 2021 issuance.

The notes will sit within a JPY 250 billion layer of the Zenkyoren reinsurance tower and also feature an aggregate franchise deductible of JPY 270 billion, the same as recent deals.

As a result, the Series 2025-1 Class 1 notes will have an initial annualised attachment probability of 0.77%, an initial annualised expected loss of 0.74% and they are being offered to cat bond investors with spread price guidance in a range from 2% to 2.5%, sources said.

For comparison, the Nakama Re 2024-1 cat bond notes issued one year ago (which were also a three-year aggregate deal) launched with an initial annualised expected loss of 0.79% and priced to pay investors a spread of 2.35%.

Update 1:

We’re told that the size target for this Nakama Re 2025-1 catastrophe bond remains unchanged at $100 million, but the price guidance has been narrowed to an updated range of 2.1% to 2.25%.

Update 2:

Zenkyoren secured the targeted $100 million of Japan quake reinsurance from this Namaka Re 2025-1 catastrophe bond.

The notes were priced to pay investors a spread of 2.1%, so close to the low-end of initial guidance.