Photon Re Ltd. (Series 2026-1)

This first catastrophe bond from Photon Re Ltd. is being sponsored by Lumen Re Ltd., the the main reinsurance underwriting entity of specialist insurance-linked securities investment manager LGT ILS Partners.

Specialist insurance-linked securities investment manager LGT ILS Partners launched Lumen Re as a Bermuda-based Class 3A rated reinsurance company at the end of 2017, with the vehicle offering a balance-sheet underwriting platform for the ILS investment team that is part of private bank and asset manager LGT Capital Partners.

Lumen Re is now seeking retrocessional protection for its portfolio from the catastrophe bond market, the latest example of a specialist insurance-linked securities investment manager linked structure looking to secure hedging protection for the risks that underpin its range of managed ILS funds.

Photon Re Ltd. has been established in Bermuda for the issuance of catastrophe bonds, with in this case an initial target to issue $125 million of Series 2026-1 notes across two classes, sources told Artemis.

Those notes will be offered and sold to catastrophe bond investors, with the goal of securing a multi-year source of fully-collateralized retro reinsurance protection from the capital markets to support the underwriting portfolio of Lumen Re Ltd.

Through this debut Photon Re Ltd. Series 2026-1 catastrophe bond sponsorship, Lumen Re is seeking retrocessional protection against the peak North American perils of named storms and earthquakes, on an industry loss trigger and annual aggregate basis over a four year term to the end of February 2030, we understand.

A $75 million tranche of Class A notes are designed to provide annual aggregate industry-loss based protection against named storm events affecting US north-east states, as well as earthquake events affecting the US and Canada, we are told.

The Class A notes feature a franchise deductible of 7.5 billion index points and would attach their coverage at 30 billion index points, exhausting at 40 billion. Which gives them an initial attachment probability of 5%, an initial base expected loss of 4.34% and they are being offered to investors with price guidance of 8.5% to 9%.

A $50 million tranche of Class B notes are designed to provide Lumen Re with annual aggregate industry-loss based protection against named storm and earthquake events covering the entirety of the US and Canada, sources said.

The Class B notes also feature a franchise deductible of 7.5 billion index points, but would only attach their coverage at 95 billion index points, exhausting at 115 billion. Which gives them an initial attachment probability of 5.65%, an initial base expected loss of 4.8% and they are being offered to investors with price guidance of 9.25% to 10%.

Update 1:

Lumen Re, the LGT ILS Partners linked reinsurer, is now looking to upsize this debut Photon Re Ltd. Series 2026-1 catastrophe bond issuance.

We’re now told that the Class A notes are targeted at between $100 million and $125 million in size, while their price guidance has been updated at a lower range of 8% to 8.5%.

The Class B notes are now being offered at between $50 million and $75 million in size, while their price guidance has also been updated at a lower range of 8.75% to 9.25%.

Update 2:

Lumen Re priced this debut Photon Re Ltd. Series 2026-1 catastrophe bond issuance below guidance to provide $175 million of retro protection.

The Class A notes were finalised at $125 million in size, while they were priced to pay an initial risk interest spread of 8%, so below the initial guidance.

The Class B notes were finalised at $50 million in size, while they were priced to pay an initial risk interest spread of 8.75%, again below the initial guidance.