1 month ago
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Talanx AG, the German insurance and reinsurance group, has entered the catastrophe bond market with its debut transaction, seeking $100 million or more in parametric Latin America earthquake protection through this Maschpark Re Ltd. (Series 2024-1) issuance, Artemis has learned.
Talanx is utilising its reinsurance arm Hannover Re to assist in accessing the capital markets for reinsurance capacity, with Hannover Re set to front Bermuda-based company Maschpark Re directly, then pass on the coverage to its parent.
The target is to secure $100 million or more in parametric earthquake protection, with the focus of that coverage being on Chile, but with quakes occurring in neighbouring countries also able to trigger the Maschpark Re 2024-1 cat bond notes, we are told.
We suspect the driver for this debut catastrophe bond for Talanx AG, is the firm’s growing industrial and large risk exposure in Latin America, with a concentration of that in Chile itself, we understand.
Maschpark Re Ltd. has been established in Bermuda to issue a single tranche of Series 2024-1 Class A notes, that will be sold to investors and the proceeds used to collateralize a retrocession agreement between the structure and Hannover Re, which will in turn enter into a reinsurance agreement to pass on the protection to Talanx AG.
The coverage will run across a three-year term, from January 2025 through the end of 2027, we understand from sources, while the reinsurance protection Talanx will benefit from will be on a per-occurrence basis and based on a parametric trigger arrangement.
As said, the coverage will be for earthquake events impacting Chile, but the parametric box extends into Peru, Bolivia, and Argentina. We’re told the central focus of the parametric box is around the Santiago area of Chile, which is likely an area of risk concentration for the sponsor Talanx.
There are different payout factors within the parametric trigger arrangement, depending on location, magnitude and depth of an applicable earthquake event, it appears, with a minimum payout of 25% running up to a full 100% of principal payout, dependent on the exact parameters of an earthquake event.
We understand that the $100 million of Maschpark Re 2024-1 cat bond notes will come with an initial attachment probability of 1.13%, an initial expected loss of 0.92% and spread price guidance of between 3.5% and 4%.
This new parametric offering, with its Latin America peril focus, will offer catastrophe bond funds and investors another welcome diversification opportunity, being a region rarely featured in the cat bond market.
You can read all about this new Maschpark Re Ltd. (Series 2024-1) catastrophe bond and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory.
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