Tokio Marine & Nichido Fire Insurance Co. Ltd., the Japanese primary insurance group, is back in the catastrophe bond market to sponsor an initially $100 million Kizuna Re III Pte. Ltd. (Series 2026-1) transaction, that is designed to provide collateralized earthquake reinsurance protection and is being issued out of Singapore, Artemis has learned.
Tokio Marine has been sponsoring catastrophe bonds since the very early days of the market. The firm brought an innovative and appropriately named Parametric Re Ltd. to investors back in 1997.
For this new issuance, the Japanese insurance carrier is sponsoring this Kizuna Re catastrophe bond out of Singapore again, now the third Tokio Marine cat bond to use a special purpose reinsurance vehicle domiciled there, sources have told us.
As we’ve explained before, being an Asian cat bond sponsor that is looking to transfer Asian risk to the capital market, the use of a Singapore based special purpose reinsurance vehicle (SPRV) is likely to provide some benefits to Tokio Marine, presumably allowing it to qualify for the Monetary Authority of Singapore’s ILS grant program funding.
This is the first catastrophe bond since April 2025 to be issued out of Singapore, with just that one deal last year, but three Singapore issuance’s having been seen in 2024.
Kizuna Re III Pte. Ltd. is planning to issue a single Class A tranche of Series 2026-1 notes, that will be sold to investors and the proceeds used to collateralize an underlying reinsurance agreement between the issuer and Tokio Marine & Nichido Fire Insurance.
The target size for this issuance is at least $100 million, we understand, while the reinsurance coverage will protect the sponsor against similar losses to its last issuance in 2024, which covered losses from Japanese earthquakes, including from any related impacts caused by shake, tsunami, fire, flooding, dam rupture and sprinkler leakage, while also covering such events as sea quakes and seismic volcanic disturbances or eruptions.
As with that 2024-1 cat bond issuance, this new Kizuna Re III 2026-1 cat bond will provide reinsurance coverage to a portfolio of Tokio Marine & Nichido Fire’s business, including commercial, personal and industrial property policies, personal accident, automobile losses, presumably also again including certain reinsurance assumption between the cedant and group companies.
Tokio Marine’s coverage from the Kizuna Re III 2026-1 cat bond will be on a three-year rolling aggregate and indemnity trigger basis, across a five year term, as it’s most recent earthquake cat bonds have tended to be structured.
In other words it features three overlapping three-year aggregate risk periods, that run across the full five-year term of the reinsurance coverage. As a result, maturity for this new deal is slated for early April 2031, we are told.
Similarly to the 2024 Kizuna Re cat bond, this one will also feature a franchise deductible per-earthquake event that qualifies under the terms of the deal of JPY 40 billion, while the attachment point for the first of the three-year risk periods is JPY 40bn, while it will cover a share of losses up to JPY 160 billion.
The $100 million of Series 2026-1 Class A cat bond notes that Kizuna Re III Pte. Ltd. is offering come with an initial attachment probability of 7.18% on a three-year basis (2.39% annualised) and an initial expected loss of 2.36% on a three-year basis (0.79% annualised), sources said.
We’re told the $100 million of notes are being offered to catastrophe bond investors with pricing guidance of 2.25% to 2.75%.
For comparison, the 2024-1 Kizuna Re quake cat bond from Tokio Marine had an initial annualised expected loss of 0.53% and priced with to pay investors an initial 2.75% spread.
One difference between the 2024-1 cat bond and this Kizuna Re III 2026-1 cat bond that we’ve been alerted to, is the fact the collateral will initially be invested in an Asian Development Bank (ADB) note.
That 2024-1 deal had seen its collateral invested in a SOFR-based Sustainable Development Bond issued by the World Bank Group’s International Bank for Reconstruction and Development (IBRD), which the sponsor hailed at the time as a first.
We’re only aware of one other catastrophe bond that utilises an ADB notes for its collateral investment, which was the $100 million Nakama Re Pte. Ltd. (Series 2025-1) catastrophe bond sponsored by Zenkyoren last year.
Being a Japanese risk, this new Kizuna Re from Tokio Marine should prove attractive to investors from a diversification perspective. It may not be for everyone, given the very low spreads on offer as is typical with Japanese quake risk deals, but for some the chance to add more diversification to their portfolios will be very welcome.
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.
