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Mitsui Sumitomo Insurance has raised its estimate of losses from Japanese typhoons that struck in 2018, which has driven the qualifying aggregate loss amount under the terms of its $200 million catastrophe bond Akibare Re Ltd. (Series 2016-1) over the exhaustion point.
As a result, it’s now expected that the $200 million of Akibare Re 2016-1 cat bond notes will be marked down to close to zero on broker pricing sheets today, to reflect the new expectation that this will be a total loss of principal for the investors and funds holding this cat bond.
This catastrophe bond provides sponsoring insurer Mitsui Sumitomo with a source of collateralized annual aggregate reinsurance backed by the capital markets, covering certain losses from Japan typhoons including some flood risk as well as wind.
The main cause of the ongoing loss creep that has affected the value of the Akibare Re 2016-1 cat bond has of course been typhoon Jebi, which with insurance and reinsurance industry loss expectations now around $13 billion has driven a significant impact to Mitsui Sumitomo, as one of the largest domestic Japanese insurers.