18 March 2014ILS

Tokio issues second Bermuda quake bond

Tokio Marine and Nichido Fire Insurance, the property and casualty subsidiary of Tokio Marine, has issued a $245 million Bermuda-based bond for Japanese earthquake risk.

Kizuna Re II is the second catastrophe bond transaction issued by Tokio and follows the success of the company’s 2011 bond, Kizuna Re.

Takashi Oka, head of reinsurance at Tokio, said: “We are proud to announce the successful catastrophe bond issuance under Kizuna Re II. It was quite a challenge to become the first earthquake indemnity catastrophe bond covering commercial and industrial exposures in Japan. We are pleased that through this issuance we were able to broaden and deepen relationships with capital market investors, which we have been cultivating since the issuance under Kizuna Re Ltd.”

Aon Benfield Securities was the sole book runner on the deal, which saw Bermuda-based Kizuna Re II, issue two tranches of notes. Class A was issued at $200 million and priced at 2.25 percent above money market return, with a maturity of four years. Class B was issued at $45 million and priced at 2.5 percent above money market return with the same maturity.

Paul Schultz, chief executive officer of Aon Benfield Securities, said: “After the proven success of Kizuna Re in 2011, we are pleased to have successfully placed Kizuna Re II on terms attractive to Tokio Marine & Nichido Fire Insurance. Investors were very supportive of the transaction, demonstrating both the high quality of the sponsor as well as the attractiveness of Japan earthquake risk as a diversifying peril in the ILS market.”