Tomoni Re Pte Ltd. (Series 2024-1)

This new catastrophe bond issuance will benefit two of the Japanese insurance carriers owned and operated by MS&AD Insurance Group Holdings.

The ultimate beneficiaries of the fully-collateralized catastrophe reinsurance that this Tomoni Re 2024-1 catastrophe bond will provide, will be Mitsui Sumitomo Insurance Co. Ltd. and Aioi Nissay Dowa Insurance Co., Ltd., both of which have been sponsors or beneficiaries of catastrophe bond backed reinsurance protection before.

The companies are using the Tomoni Re Pte Ltd. vehicle for this cat bond, which is a Singapore based special purpose reinsurance vehicle established in 2022 for the MS&AD group’s last cat bond deal.

With this new transaction, Tomoni Re Pte Ltd. will issue two tranches of Series 2024-1 catastrophe bond notes, one to provide reinsurance protection to ceding insurer Mitsui Sumitomo Insurance Co. Ltd. and the other to benefit Aioi Nissay Dowa Insurance Co., Ltd.

The first tranche of Series 2024-1 notes on offer from Tomoni Re Pte Ltd., are a $75 million Class A tranche which will provide Mitsui Sumitomo Insurance Co. Ltd. with a source of Japanese typhoon and Japanese flood reinsurance protection, on an indemnity and per-occurrence basis. This protection will run over a four-year term to the end of March 2028, we understand.

The $75 million of Class A notes come with an initial attachment probability of 1.72%, an initial expected loss of 1.45% and are being offered to cat bond investors with spread guidance in a range from 3% to 3.5%, sources said.

The second tranche of Series 2024-1 notes on offer from Tomoni Re Pte Ltd., are a $100 million Class B tranche that will protect Aioi Nissay Dowa Insurance Co., Ltd. and are structured to provide both a source of per-occurrence and aggregate coverage, within the same tranche of notes.

The Class B notes will provide indemnity and per-occurrence reinsurance for Japanese typhoons and floods over the four year term, and also rolling 3-year aggregate reinsurance for Japanese earthquake losses as well.

The aggregate cover therefore sees two 3-year risk periods over the four-year term and we’re told there is a JPY 80 billion franchise deductible for earthquakes to qualify under it.

Because of this two-section coverage under the Class B notes, they have both occurrence and aggregate metrics, with an initial attachment probability of 1.36% and expected loss of 1.31% on the occurrence wind and flood side, and an initial attachment probability of 0.37% and expected loss of 0.32% on the quake side.

The combined metrics for the Class B notes are an initial attachment probability of 1.7% and an initial expected loss of 1.6%, while the notes are being offered to cat bond investors with price guidance in a range from 3.75% to 4.25%, we are told.

With this second Tomoni Re catastrophe bond out of Singapore, MS&AD is broadening its coverage to include quake risks as well, while also using a novel structure to provide this efficiently across a shared occurrence and aggregate limit through the Class B notes.

Update 1:

MS&AD’s target for its latest catastrophe bond has been increased, with now up to $200 million of protection sought.

Price guidance for the Class A notes has been updated to 3% to 3.25% and for the Class B notes to 4%, so suggesting both tranches will be priced within the initial guidance.

Update 2:

We’re now told that MS&AD secured the upsized target of $200 million of collateralized reinsurance from this new Tomoni Re 2024-1 catastrophe bond.

Both tranches of notes priced at $100 million in size, while the Class A notes priced at 3.25% and the Class B notes at 4%, so both at what was the mid-point of their initial guidance ranges.