AXA XL, the global specialty insurance and reinsurance arm of the AXA Group, is now seeking lower pricing for its new catastrophe bond issuance, while the target remains to secure $175 million of industry loss based retrocessional protection from the capital markets, Artemis has learned.AXA XL returned to the catastrophe bond market recently, its first time in the market since December 2023.With a two year tranche of notes from that cat bond set to mature soon and having provided $175 million of peak peril retro reinsurance protection for AXA XL, it was encouraging to see the company return looking to replace that limit.We’re now told that the target size for the Galileo Re 2025-1 catastrophe bond issuance has not changed so far, with still $175 million of retrocessional catastrophe reinsurance being sought by AXA XL.

But, we are told that the price guidance has fallen to below the initially marketed ranges for each of the tranches of notes on offer, as AXA XL looks to capitalise on the strong execution being seen in the cat bond market thanks to very strong investor demand.As a result, the goal with this Galileo Re 2025-1 cat bond issuance is still to secure $175 million of protection for AXA XL’s underwriting entities against losses from U.S., DC, Puerto Rico, and Virgin Islands named storm, as well as U.S.and Canada earthquakes, on a per-occurrence and weighted industry loss index trigger basis, to run over a four year term to the end of 2029.

The $85 million Class A tranche of Series 2025-1 notes that are on offer will provide AXA XL with coverage for losses from named storms only, across the regions mentioned.The Class A notes come with an initial base expected loss of 1.39% and were initially offered to investors with price guidance in a range from 3.25% to 3.75%, but we understand that guidance has been updated to a lower range of 3% to 3.25%.The $90 million Class B tranche of Series 2025-1 notes will provide AXA XL with coverage for losses from named storms and earthquakes, across the regions mentioned.

The Class B notes come with an initial base expected loss of 2.95% and were first offered to investors with price guidance in a range from 5.25% to 6%, but we’re now told that has also been lowered to a revised range of 5% to 5.25%.Which shows AXA XL currently prioritising the cost of coverage over the amount of limit it could secure from the cat bond market, given the evident investor appetites we’re seeing would suggest the deal could have been easily upsized should the sponsor have wanted to.You can read all about AXA XL’s new transaction to our Deal Directory, where you can analyse details of almost every catastrophe bond ever issued..

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