Zenkyoren prices $150m Nakama Re 2024-1 cat bond within guidance

Zenkyoren, the Japanese National Mutual Insurance Federation of Agricultural Cooperatives, has now secured its targeted $150 million of reinsurance from the new Nakama Re Pte. Ltd. (Series 2024-1) catastrophe bond, with the notes spread now priced within the initial guidance.

Zenkyoren came back to the catastrophe bond market in March aiming to secure $150 million or more in aggregate Japanese earthquake reinsurance protection from the capital markets.

As we later reported, the price guidance for the notes was narrowed towards the upper-end of guidance, a relatively rare occurrence for the catastrophe bond market in 2024.

But, we’re now told that final pricing saw the spread fixed in the lower-half of the initial guidance, although for once not at the bottom or even below it, as has been seen in many recent cat bond deals.

Demonstrating that the cat bond investor base continues to have return requirements and expectations that mean they will not chase rates down to the bottom for every new cat bond that comes to market.

Zenkyoren has now secured the $150 million of Japanese earthquake reinsurance protection on a three-year aggregate, indemnity triggered basis, across a roughly five year term to end of March 2029, with three annual aggregate risk periods, each three-years in length, that overlap.

It’s the latest catastrophe bond to be issued in Singapore as well, as that domicile continues to see activity from Asian cat bond sponsors.

Register for our ILS Asia 2024 conference to join us in Singapore on July 11th to hear more about cat bond activity in the region.

With Zenkroren’s latest catastrophe bond, the $150 million tranche of Class 1 notes come with an initial annualised expected loss of 0.79% and were at first offered to investors with spread guidance of between 2.25% and 2.5%.

As we reported, we were later told the $150 million of Nakama Re 2024-1 Japanese earthquake cat bond notes were being offered with updated and narrowed price guidance of 2.35% to 2.5%.

Now, the notes have been priced to pay investors a spread of 2.35%, so within the lower-half of the initial guidance, but not at the bottom of it.

As a comparison, the Nakama Re 2023-1 Class A cat bond notes had the same initial expected loss as this 2024-1 issuance and priced at 2.5%, but were only providing one-year aggregate reinsurance coverage, so were structurally a little different.

However, the price decline over the last year seems aligned with other cat bond deals and the fact these have remained within guidance shows that, for these diversifying peril cat bonds with minimal excess spreads,  the cat bond investor base still has minimum return requirements, which have been made evident here.

Zenkyoren remains 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.

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.