Lumen Re, the main reinsurance underwriting entity of LGT ILS Partners, is now aiming to secure up to $200 million in retrocessional protection against losses from North American peak perils with its debut Photon Re Ltd. (Series 2026-1) catastrophe bond issuance, Artemis has learned.
As we’ve explained before, Lumen Re is used by LGT ILS Partners as a platform for the majority of its direct reinsurance writings. It effectively merges the advantages of both worlds for the ILS manager, providing a rated reinsurance company to front counterparties associated with the LGT ILS fund management operations, while simultaneously maintaining the fully-collateralized principle of ILS.
With this debut catastrophe bond, Lumen Re is seeking retrocessional protection for its underwriting portfolio from the capital markets, which marks the latest example of a specialist insurance-linked securities investment manager linked structure looking to secure hedging protection for the risks that underpin its range of managed ILS funds.
We’re now told that the target across the two tranches of Series 2026-1 cat bond notes that Photon Re Ltd.is seeking to issue is for between $150 million and as much as $200 million of retrocessional protection for Lumen Re.
The two tranches of Photon Re Series 2026-1 cat bond notes that are on offer are designed to provide Lumen Re with a multi-year source of fully-collateralized retro reinsurance protection against the peak North American perils of named storms and earthquakes, on an industry loss trigger and annual aggregate basis over a four year term to the end of February 2030.
What was a $75 million tranche of Class A notes are now targeted at an upsized between $100 million and $125 million, we are told.
As we explained in a previous article, the Class A notes are designed to provide Lumen Re with annual aggregate industry-loss based protection against named storm events affecting US north-east states, as well as earthquake events affecting the US and Canada.
The Class A notes feature a franchise deductible of 7.5 billion index points and would attach their coverage at 30 billion index points, exhausting at 40 billion. This gives them an initial attachment probability of 5%, an initial base expected loss of 4.34%.
The notes were originally being offered to cat bond investors with price guidance of 8.5% to 9%, but sources have now told us that price guidance has been reduced to between 8% to 8.5%.
What was a $50 million tranche of Class B notes are now being targeted to be between $50 million and $75 million in size. These Class B notes are designed to provide Lumen Re with annual aggregate industry-loss based protection against named storm and earthquake events covering the entirety of the US and Canada,
The Class B notes also feature a franchise deductible of 7.5 billion index points, but would only attach their coverage at 95 billion index points, exhausting at 115 billion. This gives them an initial attachment probability of 5.65%, an initial base expected loss of 4.8%.
The notes were originally being offered to cat bond investors with price guidance of 9.25% to 10%, but we are now told that guidance has been reduced to a tighter spread of 8.75% to 9.25%.
All of which suggests that Lumen Re is well on-track to secure a larger catastrophe bond sponsorship than originally expected during its first time in the market, and at lower pricing than the initial guidance.
As a reminder, you can read all about this new Photon Re Ltd. (Series 2026-1) catastrophe bond and over 1,000 other cat bond transactions in our extensive Artemis Deal Directory.
