Sompo Japan targets $150m Sakura Re 2025-1 typhoon and flood cat bond

Japanese insurance company Sompo Japan is back in the catastrophe bond market seeking $150 million or more in reinsurance protection for Japanese typhoon and flood loss events from a Sakura Re Ltd. (Series 2025-1) issuance, Artemis has learned.

Sompo Japan was last in the catastrophe bond market back in 2021, when it secured $400 million in reinsurance against losses from Japanese typhoon, Japanese flood and US earthquake events with a Sakura Re 2021-1 catastrophe bond.

That was the first cat bond in the Sakura Re series, but since then the Sompo International division also sponsored a Sakura Re 2022-1 issuance, that secured that entity a $150 million source of industry-loss triggered US and Canada named storm and earthquake reinsurance protection.

Now, the Japanese parent insurance entity has returned, this time seeking reinsurance protection only against Japanese typhoon and flood loss events, we understand.

Bermuda based special purpose insurer named Sakura Re Ltd. will target the issuance of a single initially $150 million Class A tranche of Series 2025-1 notes.

Aligned with its reinsurance renewal, the new Sakura Re cat bond will provide its coverage to Sompo Japan Insurance and affiliates from April 1st 2025, but will run across a four year term from that date, we understand.

The Sakura Re 2025-1 Class A notes are designed to provide Sompo Japan Insurance and affiliates with the four years of reinsurance protection against losses from Japanese typhoon and Japanese flood events on an indemnity trigger and per-occurrence basis.

We’re told the currently $150 million of Class A notes would attach their reinsurance protection from an attachment point of JPY 500 billion and exhaust their coverage at JPY 600 billion.

That’s a layer of the reinsurance tower that roughly spans from US $3.35 billion of losses to around US $4 billion, so giving plenty of scope for this issuance to upsize, should the sponsor choose to.

Which gives the Sakura Re 2025-1 Class A notes an initial attachment probability of 1.88%, an initial expected loss of 1.58% and they are being offered to cat bond investors with price guidance in a range from 2.75% to 3%, we understand.

This will be the first Japanese peril focused catastrophe bond of 2025, so it will be interesting to see whether it experiences strong demand from cat bond funds and investors being a clear diversification opportunity for their portfolios, albeit with a lower spread multiple.

You can read all about this new Sakura Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.