Tokio Marine secures $100m Kizuna Re quake cat bond at mid-guidance pricing

Tokio Marine & Nichido Fire Insurance Co. Ltd. has now secured the targeted $100 million of multi-year collateralized Japanese earthquake reinsurance protection from its new Kizuna Re III Pte. Ltd. (Series 2026-1) catastrophe bond transaction, with the notes now priced at the mid-point of guidance, Artemis understands.

Tokio Marine returned to the catastrophe bond market in late February for the tenth catastrophe bond we have featured in our extensive Deal Directory that will provide reinsurance to part of the Tokio Marine Holdings group of companies and what will become the seventh in the Kizuna Re series of cat bond deals.

The initial target was to secure $100 million of collateralized earthquake reinsurance from this new Kizuna Re III cat bond for the sponsoring entities.

As we reported in an update on the deal, the target size remained unchanged but that the price guidance was updated at the mid-point of the range of spreads that was on offer.

Now, we understand that the Kizuna Re III Series 2026-1 catastrophe bond notes have been successfully priced, to secure the targeted reinsurance coverage at the updated level of spread.

Recall that this will be the third Tokio Marine cat bond to use a special purpose reinsurance vehicle domiciled in Singapore and the first catastrophe bond since April 2025 to be issued out of the domicile.

Being an Asian cat bond sponsor that will transfer Asian peril risks to the capital market through this deal, the use of a Singapore based special purpose reinsurance vehicle (SPRV) will likely provide some benefits to Tokio Marine, presumably allowing it to qualify for the Monetary Authority of Singapore’s ILS grant program funding.

With the deal now finalised, Kizuna Re III Pte. Ltd. will issue $100 million of Series 2026-1 Class A notes that will provide Tokio Marine and Nichido Fire Insurance with capital markets backed reinsurance for Japanese earthquake loss events, structured on a three-year rolling aggregate and indemnity trigger basis, across a five year term.

The $100 million of Series 2026-1 Class A cat bond notes that Kizuna Re III Pte. Ltd. will issue come with an initial expected loss of 2.36% on a three-year basis (0.79% annualised).

Initially the notes were offered to catastrophe bond investors with pricing guidance of 2.25% to 2.75%, but as we reported that was updated at the mid-point of that range, for a spread of 2.5%.

Which is where the notes have now been priced to pay their initial risk interest spread to investors, we are told.

As we had explained, this represents lower pricing compared to the 2024-1 Kizuna Re quake cat bond from Tokio Marine, which came with an initial annualised expected loss of 0.53% and priced to pay investors an initial 2.75% risk interest spread.

You can read all about this new Kizuna Re III Pte. Ltd. (Series 2026-1) catastrophe bond transaction and every other Tokio Marine sponsored cat bond in our Artemis Deal Directory.