MS&AD Insurance Group issues catastrophe bonds
Mitsui Sumitomo Insurance Company and Aioi Nissay Dowa Insurance, both members of MS&AD Insurance Group Holdings, have jointly issued the “Tomoni Re 2024” catastrophe bonds (“cat bonds”) in Singapore covering domestic natural disaster risks in Japan.
Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance diversified their capacity sources and secured long-term coverage by jointly issuing catastrophe bonds, leveraging the know-how and expertise of both companies, while continuing to enhance the group’s risk management strategies through the purchase of reinsurance.
This is the 7th issuance for Mitsui Sumitomo Insurance and 3rd issuance for Aioi Nissay Dowa Insurance. Singapore has introduced various initiatives to develop the market for insurance-linked securities, such as an “Insurance Linked Securities Grant Scheme” to subsidize costs of cat bond issuances.
Through appropriate use of reinsurance and cat bonds, the MS&AD Insurance Group Holdings will continue to strengthen risk management and improve soundness of the management, while promoting initiatives to improve the resilience of society.
Summary of “Tomoni Re 2024”
Two tranches of notes have been issued by “Tomoni Re Pte. Ltd.”, a Singapore based special-purpose reinsurance vehicle jointly sponsored by Mitsui Sumitomo Insurance and Aioi Nissay Dowa. Each class of notes provides indemnity reinsurance protection. When losses due to natural disasters in Japan exceed a certain threshold, a portion or the entire amount of the principal is paid to the sponsors as reinsurance in accordance with the amount exceeding threshold.
The Class A tranche will provide Mitsui Sumitomo Insurance USD 100M of typhoon and flood protection on a per occurrence basis, realizing competitive spread in comparison with similar range of risk level.
The Class B tranche provides Aioi Nissay Dowa USD 100M and covers both typhoon and flood on per occurrence basis, and earthquake on a 3-year rolling aggregate basis by the same shared limit, which is the first cat bond structure introduced on a global basis.
Trigger for Loss Payment/Redemption
Loss amount in excess of pre-determined trigger condition per loss event occurrence will be paid from principal of cat bond with maximum limit of principal amount.
Loss aggregate amount of all loss events that are in excess of pre-determined condition will be paid from principal of cat bond with maximum limit principal amount.
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