MS&AD lifts target for Tomoni Re 2024 multi-peril cat bond to $200m

MS&AD Insurance Group Holdings has lifted the target size for its latest catastrophe bond slightly, with now up to $200 million of multi-year and multi-peril Japanese catastrophe reinsurance protection sought for its two main Japanese insurance carriers, through this Tomoni Re Pte Ltd. (Series 2024-1) issuance.

At the same time, we’re told that the price guidance for each of the tranches of notes has been updated and continued to be within the initial ranges.

The Japanese insurance group returned to the catastrophe bond market earlier this month, seeking reinsurance coverage across three Japanese perils, on both a per-occurrence and aggregate basis with this new Tomoni Re cat bond deal.

With this new transaction, Singapore based SPRV vehicle Tomoni Re Pte Ltd. is set to issue two tranches of Series 2024-1 catastrophe bond notes, one to secure reinsurance protection for ceding insurer Mitsui Sumitomo Insurance Co. Ltd. and the other for Aioi Nissay Dowa Insurance Co., Ltd.

A $75 million Class A tranche of notes that will provide Mitsui Sumitomo Insurance Co. Ltd. with a four-year source of Japanese typhoon and Japanese flood reinsurance protection, on an indemnity and per-occurrence basis are now being offered at up to $100 million in size, we understand, so this is the source of the increase in issuance size.

The now up to $100 million of Class A notes come with an initial expected loss of 1.45% and were first offered to cat bond investors with spread guidance in a range from 3% to 3.5%. That guidance has now been updated to a new range of 3% to 3.25%, we are told, so still within the initial range offered.

The second tranche of Series 2024-1 notes on offer from Tomoni Re Pte Ltd., are still a $100 million Class B tranche for Aioi Nissay Dowa Insurance Co., Ltd., 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.

With this two-section coverage approach for the Class B notes, they have both occurrence and aggregate metrics, with an initial expected loss of 1.31% on the occurrence wind and flood side, and an initial expected loss of 0.32% on the quake side.

The combined metrics for the Class B notes are an initial expected loss of 1.6% and the notes were first offered to cat bond investors with price guidance in a range from 3.75% to 4.25%. We are now told that guidance has been fixed at 4%, so the mid-point of the initial range.

It’s good to see MS&AD looking to upsize the deal slightly and with pricing on target to settle within the initial guidance ranges as well.

You can read all about this new Tomoni Re Pte Ltd. (Series 2024-1)  catastrophe bond and every other cat bond transaction ever issued in the extensive Artemis Deal Directory.