Sompo International, the global P&C insurance and reinsurance arm of Sompo Holdings, has successfully upsized its new Sakura Re Ltd. (Series 2022-1) catastrophe bond to provide it with $150 million of reinsurance protection.
This is the first catastrophe bond ever to be solely sponsored by Sompo International and therefore the company will be delighted with the result, especially given market conditions.
It will be the second catastrophe bond issued by the Sakura Re Ltd. vehicle, but the first to benefit just Sompo International, as the previous Sakura had provided reinsurance to the Japanese insurance entities of Sompo Holdings as well as protection to the International arm.
Now finalised, this Sakura Re 2022-1 cat bond will provide Sompo International with $150 million of US and Canadian specific property catastrophe reinsurance coverage, against losses from named storms and earthquakes.
It features a dual trigger, to provide Sompo International with per-occurrence retro reinsurance protection for earthquake risks and annual aggregate for named storms.
The deal launched offering a $100 million tranche of Class A notes to investors, featuring a PCS industry loss index trigger and to provide retrocessional reinsurance protection across a three-year term, over three annual risk periods, to almost the end of 2025.
Helped by investor demand for issuances from quality sponsors, Sompo International has grown this cat bond by 50%, with the Class A tranche to be finalised at $150 million in size.
The notes come with an initial attachment probability of 3.73%, an initial base expected loss of 2.96% and were initially offered to cat bond investors with price guidance in a range from 12.5% to 13.5%.
The coupon was raised to the top-end of that guidance, at 13.5%, meaning the notes will pay investors a multiple of almost 4.6 times the base expected loss.
For Sompo International, this first visit to the cat bond market as sole sponsor will be seen very positively, having come away with 50% more coverage than the initial target and while priced at the top-end, the multiple is aligned with the market average for recent issuance.