MS&AD Insurance Group Holdings Inc. has issued two catastrophe bonds, each valued at $100 million, in addition to adjusting its net income forecast for fiscal year 2023, increasing it by 25%.
As per a report from AM Best, the catastrophe bonds were issued through Tomoni Re 2024 in Singapore, a collaboration between the group’s Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance Co. Ltd.
Tomoni Re Pte. Ltd., a special-purpose reinsurance vehicle based in Singapore and sponsored by the two insurance units, facilitated the issuance. The bonds are designed to offer indemnity reinsurance protection against natural disasters, with each bond set to mature in March 2028.
The issuance is divided into two tranches: Class A and Class B. Class A provides Mitsui Sumitomo Insurance with $100 million in coverage against typhoon and flood risks on a per-occurrence basis, offering competitive pricing relative to the risk level involved.
Class B, on the other hand, extends $100 million in coverage to Aioi Nissay Dowa Insurance for typhoons, flood on a per-occurrence basis, and earthquake risks on a three-year rolling aggregate basis, all within the same shared limit.
The issuance marks the seventh for Mitsui Sumitomo Insurance and the third for Aioi Nissay Dowa Insurance, showcasing a continued reliance on catastrophe bonds to manage natural disaster risks effectively.
Meanwhile, the group’s Lloyd’s underwriter, MS Amlin, reported a return to profit in 2023, attributed to an improved experience with natural catastrophes and a favorable rate environment.
The revised net income target for the fiscal year ending March 31 is now set at ¥350 billion ($2.31 billion), up from the previously projected ¥280 billion. The forecast for ordinary income has also been raised to ¥410 billion from ¥400 billion.
The adjustments are primarily attributed to the anticipated performance of its subsidiary, Mitsui Sumitomo Insurance and its international subsidiaries, which are expected to surpass initial projections.
Furthermore, the group revised its ordinary profit forecast due to anticipated losses on sales of securities and impairment losses at Mitsui Sumitomo Primary Life Insurance, attributed to a hike in foreign interest rates.
However, the impact on net income attributable to the parent company is expected to be mitigated by the reversal of the reserve for price fluctuation, ensuring a balanced financial outlook for the group.
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