Sakura Re Ltd. (Series 2025-1)

Sompo Japan Insurance has returned to the catastrophe bond market for a new Sakura Re Ltd. catastrophe, through which it seeks an expanded source of capital markets backed reinsurance to cover Japanese wind and flood events.

Bermuda based special purpose insurer named Sakura Re Ltd. will target the issuance of a single initially $150 million Class A tranche of Series 2025-1 notes.

Aligned with its reinsurance renewal, the new Sakura Re cat bond will provide its coverage to Sompo Japan Insurance and affiliates from April 1st 2025, but will run across a four year term from that date, we understand.

The Sakura Re 2025-1 Class A notes are designed to provide Sompo Japan Insurance and affiliates with the four years of reinsurance protection against losses from Japanese typhoon and Japanese flood events on an indemnity trigger and per-occurrence basis.

We’re told the currently $150 million of Class A notes would attach their reinsurance protection from an attachment point of JPY 500 billion and exhaust their coverage at JPY 600 billion.

That’s a layer of the reinsurance tower that roughly spans from US $3.35 billion of losses to around US $4 billion, so giving plenty of scope for this issuance to upsize, should the sponsor choose to.

Which gives the Sakura Re 2025-1 Class A notes an initial attachment probability of 1.88%, an initial expected loss of 1.58% and they are being offered to cat bond investors with price guidance in a range from 2.75% to 3%, we understand.

Update 1:

We understand that Sompo Japan successfully secured the targeted $150 million of Japanese typhoon and flood reinsurance protection from its latest cat bond.

The $150 million of Sakura Re 2025-1 Class A notes were priced to pay investors a spread of 2.75%, so at the low-end of guidance.