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Solomon Re Ltd. (Series 2023-1)

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Solomon Re Ltd. (Series 2023-1) – At a glance:

  • Issuer: Solomon Re Ltd.
  • Cedent / sponsor: Korean Re
  • Placement / structuring agent/s: Aon Securities is sole structuring agent and bookrunner
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: US named storm, US earthquake
  • Size: $75m
  • Trigger type: Industry loss index
  • Ratings: NR
  • Date of issue: Jun 2023

Solomon Re Ltd. (Series 2023-1) – Full details:

This is the first catastrophe bond that will benefit Korean Reinsurance Company, a global reinsurer headquartered in Korea.

A Bermuda based company, Solomon Re Ltd. will issue a series of catastrophe bonds that will provide the capital for the protection, sources told Artemis.

For its first, Solomon Re Ltd. will issue a single, currently $75 million tranche of Series 2023-1 Class A notes, that will be sold to investors and the proceeds used to collateralize a retrocession agreement between the issuer and Hannover Re, with the global reinsurer fronting the capital markets.

That protection will then be passed on to Korean Re through a reinsurance contract between Hannover Re and the ultimate beneficiary.

The protection will be against certain losses from US named storms and earthquakes, over a three-year term to the end of May 2026, we’re told.

The Solomon Re 2023-1 cat bond will therefore provide capital to support Korean Re with per-occurrence retro coverage, structured on an industry loss trigger basis, via a reinsurance agreement with Hannover Re.

The coverage spans a layer from an equivalent attachment of $110 million and exhausts at $285 million, we’re told.

That gives the $75 million or more in Series 2023-1 Class A notes that Solomon Re Ltd. will issue an initial attachment probability of 2.22%, an initial expected loss of 0.93% and the notes are being offered to cat bond investors with spread guidance priced in a range from 5.25% to 6%, we’ve learned.

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