Korean Re, the global reinsurance company headquartered in the country of its name, is back to sponsor its second catastrophe bond, seeking $75 million or more in catastrophe retrocession and introducing parametric Israel earthquake as a new covered peril to this Solomon Re Ltd. (Series 2026-1) deal, Artemis can report.
The reinsurer has returned for its second sponsorship with a new Solomon Re 2026-1 cat bond offering, that seeks to renew and extend the retrocession the transaction provides.
Korean Re is again using Bermuda based special purpose insurance (SPI) company Solomon Re Ltd., this time targeting issuance of two tranches of catastrophe bond notes that will fund the risk capital for the retrocessional protection
Solomon Re Ltd. is offering two tranches of Series 2026-1 cat bond notes, that will be sold to investors and the proceeds used to collateralize a retrocession agreement between the issuer and Hannover Re, with the global reinsurer fronting the capital markets.
That protection will then be passed on to Korean Re through a reinsurance contract entered into with Hannover Re.
Where the first Solomon Re cat bond only covered US named storm and earthquake risks for Korean Re, with this second deal the reinsurer is also seeking a source of retrocession for Israel earthquake risks, which is a peril rarely seen in the market.
The Solomon Re 2026-1 cat bond is designed to provide capital to support Korean Re with per-occurrence retrocessional protection, which is structured on an industry loss trigger basis for the US named storm and earthquake perils, and structured using a parametric trigger for the Israel earthquake risk, we are told.
As such, this is a relatively less common multi-trigger cat bond issuance, with one tranche of notes providing two sections of protection, using both industry loss and parametric triggers.
Solomon Re Ltd. is offering a currently $50 million Series 2026-1 Class A tranche of notes that will cover US named storms, US earthquakes and Israel earthquake risks over a three year term, with the US perils on an industry-loss and per-occurrence trigger basis and the Israel peril on a parametric, per-occurrence trigger basis.
The US perils have an attachment point at $120 million of losses, with exhaustion at $220 million, while the Israel quake peril parametric trigger can payout based on location, depth and magnitude of any earthquake event within a defined area to allow for different payout percentages of the notes principal.
The Class A notes have an initial attachment probability of 3.21%, an initial base expected loss of 1.91% and are being offered to cat bond investors with price guidance for a spread in a range from 4.25% to 4.75%, we understand.
Solomon Re Ltd. is also offering a currently $25 million Series 2026-1 Class B tranche of notes that will only cover US named storms and US earthquakes for Korean Re again over a three year term.
The Class B notes feature an industry loss trigger and will provide per-occurrence protection, but are riskier having an attachment point at $70 million of losses and exhaustion at $120 million, so sitting below the A’s for their US named storm and quake protection, sources said.
The Class B notes have an initial attachment probability of 6.06%, an initial base expected loss of 4.03% and are being offered to cat bond investors with price guidance for a spread in a range from 7.75% to 8.25%, we understand.
It’s encouraging to learn that Korean Re is looking to build on its catastrophe bond protection, through introduction of a new peril and by utilising a more complex structure with multiple trigger types involved.
It shows another first-time sponsor becoming more sophisticated in its use of catastrophe bond coverage over time, which bodes well for the reinsurer making cat bonds a core component of its retrocessional protection.
You can read all about this Solomon Re Ltd. (Series 2026-1) catastrophe bond for Korean Re and every cat bond transaction ever issued in the extensive Artemis Deal Directory.
