The new catastrophe bond which has been issued on behalf of Japanese cooperative insurer Zenkyoren by sponsor Hannover Re, Kibou Ltd., has now completed and managed to double in size before close demonstrating the attractiveness of the diversifying peril that was on offer. Kibou Ltd. was successfully completed and will provide Hannover Re with $300m of cover for some of their reinsurance agreements with Zenkyoren.
By doubling in size during the marketing phase (as we predicted would happen) this cat bond has really demonstrated the desire to invest in diversifying perils that regular cat bond investors have.
The Kibou Ltd. cat bond provides a new layer of Japanese earthquake cover on a parametric basis ultimately for Zenkyoren. The structure of the cat bond differs to the Muteki deal, which became a total loss after the Tohoku quake, and is deemed less risky as a result which could explain the heightened interest from investors.
Standard & Poor’s affirmed the preliminary rating of ‘BB+’ on the single tranche of Series 2012-1 Class A notes.