Zenkyoren targets $150m Nakama Re 2024-1 Japan quake cat bond

Zenkyoren, the Japanese National Mutual Insurance Federation of Agricultural Cooperatives, has returned to the catastrophe bond market in search of $150 million or more in aggregate earthquake reinsurance protection from the capital markets through a Nakama Re Pte. Ltd. (Series 2024-1) deal.

Zenkyoren is one of the largest catastrophe reinsurance buyers in the world and this new Nakama Re 2024-1 cat bond will be the fourteenth catastrophe bond directly sponsored by it that we have listed in our extensive Deal Directory.

For its 2024 cat bond, Zenkyoren has returned to Singapore to use its special purpose reinsurance vehicle to issue the notes.

Zenkyoren last sponsored a cat bond out of Singapore in 2021, then used its Bermuda SPI in 2023.

This year, we’re told that Nakama Re Pte. Ltd. will seek to issue a single tranche of notes, to raise at least $150 million in capital to collateralize reinsurance agreements between the issuer and cedent Zenkyoren.

Zenkyoren is targeting the Japanese earthquake reinsurance protection on a three-year aggregate, indemnity triggered basis, with the coverage set to run across a roughly five year term to end of March 2029, with three annual aggregate risk periods, each three-years in length, that overlap across that term.

As is typical of its cat bonds, we understand Zenkyoren will benefit from protection that includes coverage for losses from shake and related perils of earthquakes, including tsunami’s, fire, flooding and sprinkler leakage.

The targeted $150 million tranche of Class 1 notes have an attachment point of JPY 1.9 trillion of losses and cover a layer to JPY 2.15 trillion, which is the same layer as Zenkyoren’s 2023 cat bond covers. The notes also feature a franchise deductible of JPY 270 billion.

This gives the notes an initial annualised attachment probability of 0.82%, an initial annualised expected loss of 0.79% and they are being offered with spread guidance of 2.25% to 2.5%, we are told.

For comparison, the Nakama Re 2023-1 Class A cat bond notes had the same initial expected loss and priced at 2.5%, but were only providing one-year aggregate coverage, so were a little different structurally.

You can read all about this Nakama Re Pte. Ltd. (Series 2024-1) catastrophe bond and every other cat bond transaction in the Artemis Deal Directory.