News Default MS&AD Issues $100 Million Cat Bonds for Natural Disaster Protection
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Catastrophe bond

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MS&AD Issues Two New $100 Million Cat Bonds

By Kenneth Araullo | Apr 02, 2024

MS&AD Insurance Group Holdings Inc. has taken proactive steps to manage natural disaster risks by issuing two catastrophe bonds, each valued at $100 million. These bonds provide indemnity reinsurance protection against natural calamities and are part of the group's strategic risk management approach.

Bond Details

The catastrophe bonds were issued through Tomoni Re 2024 in Singapore, a collaborative effort between the group's Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance Co. Ltd. The issuance was facilitated by Tomoni Re Pte. Ltd., a special-purpose reinsurance vehicle based in Singapore.

The bonds are designed to cover specific risks:

  • Class A: Provides Mitsui Sumitomo Insurance with $100 million in coverage against typhoon and flood risks on a per-occurrence basis.
  • Class B: Extends $100 million in coverage to Aioi Nissay Dowa Insurance for typhoons, flood (per-occurrence basis), and earthquake risks (three-year rolling aggregate basis).

Financial Outlook

MS&AD Insurance Group Holdings Inc. has also adjusted its net income forecast for fiscal year 2023, increasing it by 25%. The group's Lloyd's underwriter, MS Amlin, reported a return to profit in 2023 due to improved experiences with natural catastrophes and favorable rate environments.

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. Ordinary income forecasts have also been raised to ¥410 billion from ¥400 billion.

These adjustments reflect the anticipated performance of subsidiary companies, including Mitsui Sumitomo Insurance and its international counterparts.

Conclusion

MS&AD's reliance on catastrophe bonds demonstrates their commitment to effective risk management. As natural disasters continue to pose challenges, these financial instruments play a crucial role in safeguarding against unforeseen events.

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