Zenkyoren, the Japanese National Mutual Insurance Federation of Agricultural Cooperatives and largest buyer of catastrophe reinsurance coverage globally, latest catastrophe bond, Nakama Re Ltd. (Series 2014-1) has grown to $300m in size.
The Nakama Re 2014-1 cat bond launched just over a week ago, targeting at least $200m of fully-collateralized Japanese earthquake reinsurance protection, including tidal wave, flood, fire following and sprinkler damage, for Zenkyoren. The protection from the cat bond will be on an indemnity trigger and both per-occurrence and annual aggregate basis, with a tranche of notes providing each type of cover.
Artemis understands that at pricing today the Nakama Re 2014-1 catastrophe bond had upsized by 50% to $300m in size, with each of the tranches of notes now $150m. At the same time the pricing on the per-occurrence tranche settled at the low-end of guidance, while the annual aggregate settled at the mid-point.
The two tranches now look as follows. The Series 2014-1 Class 1 tranche of per-occurrence cat bond notes did not upsize, remaining at $150m. These notes launched with price guidance of 2.25% to 2.5% and at pricing this settled at the bottom end of the guidance at 2.25%.
Meanwhile the Series 2014-1 Class 2 tranche of notes grew by 200% from the $50m at launch to $150m in size at pricing. These notes launched with price guidance of 2.25% to 2.75% and at pricing this settled at the mid-point at 2.5%, Artemis understands.
Interestingly the pricing has settled where you would expect, compared to Zenkyoren’s 2013 Nakama Re cat bond. These notes are slightly less risky and the pricing has settled just a little below last years deal, so allowing for a small year-on-year decline but nothing significant, perhaps again showing investors will not support catastrophe risks at any costs and a pricing floor (of sorts) is increasingly looking to have been established for catastrophe bond risk.