Korean Re, the global reinsurance company headquartered in the country of its name, has now secured the targeted $75 million of multi-peril retrocession from its Solomon Re Ltd. (Series 2026-1) catastrophe bond sponsorship, with the notes pricing at top and bottom ends of guidance, Artemis can report.
Nearly three years ago, Korean Re sponsored its debut catastrophe bond, securing $75 million in US multi-peril catastrophe retrocession from its first Solomon Re 2023-1 issuance.
The reinsurer then made its return to the cat bond market earlier this month, with a new Solomon Re 2026-1 cat bond offering, that seeks to renew and extend the retrocession the transaction provides.
We’re told that Korean Re’s targeted $75 million size has been achieved, while the pricing of the notes has been finalised at the top and bottom ends of initial guidance.
As we previously explained, while the first Solomon Re cat bond only covered US named storm and earthquake risks for Korean Re, through this Solomon Re Series 2026-1 issuance, Korean Re will receive a source of retrocession for Israel earthquake risks, which is a peril rarely seen in the market.
Now priced, this $75 million Solomon Re 2026-1 cat bond will provide capital to support Korean Re with per-occurrence retrocessional protection, which is structured on an industry loss trigger basis for the US named storm and earthquake perils, and structured using a parametric trigger for the Israel earthquake risk.
Solomon Re Ltd. will now issue two tranches of Series 2026-1 cat bond 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 reinsurance giant fronting the capital markets.
Solomon Re Ltd. will issue a $50 million Series 2026-1 Class A tranche of notes that will cover US named storms, US earthquakes and Israel earthquake risks over a three year term, with the US perils on an industry-loss and per-occurrence trigger basis and the Israel peril on a parametric, per-occurrence trigger basis.
The Class A notes have an initial attachment probability of 3.21%, an initial base expected loss of 1.91%, and were initially offered to cat bond investors with spread price guidance in a range from 4.25% to 4.75%.
We’re now told the Class A notes have been priced to pay investors a spread of 4.75%, so at the top-end of the initial guidance.
Solomon Re Ltd. will also issue a $25 million Series 2026-1 Class B tranche of notes that will only cover US named storms and US earthquakes for Korean Re, once again across a three year term.
The Class B notes have an initial attachment probability of 6.06%, an initial base expected loss of 4.03%, and these were initially offered to cat bond investors with spread price guidance in a range from 7.75% to 8.25%.
We understand the Class B notes have been priced to pay investors a spread of 7.75%, so the bottom-end of initial guidance.
This is a strong result for Korean Re, as the company has successfully managed to secure its second catastrophe bond sponsorship at its targeted size while introducing a new peril to the coverage it receives.
As a reminder, you can read all about this Solomon Re Ltd. (Series 2026-1) catastrophe bond for Korean Re and every cat bond transaction ever issued in the extensive Artemis Deal Directory.
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