Lumen Re, the main reinsurance underwriting entity of LGT ILS Partners, is in the catastrophe bond market seeking $125 million in retrocessional protection against losses from North American peak perils with a issuance, the latest in a series of cat bonds to come from ILS manager linked structures, Artemis has learned.Specialist insurance-linked securities investment manager LGT ILS Partners launched Lumen Re as a Bermuda-based Class 3A rated reinsurance company at the end of 2017, with the vehicle offering a balance-sheet underwriting platform for the ILS investment team that is part of private bank and asset manager LGT Capital Partners.Lumen Re is used by LGT ILS Partners as a platform for the majority of its direct reinsurance writings and it combines the for the ILS manager, offering a rated reinsurance company to front counterparties of the LGT ILS fund management business, while holding onto the fully-collateralized vision of ILS at the same time.Lumen Re is now seeking retrocessional protection for its portfolio from the catastrophe bond market, the latest example of a specialist insurance-linked securities investment manager linked structure looking to secure hedging protection for the risks that underpin its range of managed ILS funds.

, as ILS manager assets under management have grown and so their portfolios of catastrophe reinsurance investments, the need for hedging has increased and at this time the cat bond market is perceived as a well-priced option to lock-in multi-year limit.It’s apparent that the price differential between capital markets and traditional sources of industry-loss triggered protection is persisting, making cat bonds an attractive option for locking in peak catastrophe peril protection for ILS manager linked underwriting entities.In this case, Photon Re Ltd.

has been established in Bermuda for the issuance of catastrophe bonds, with in this case an initial target to issue $125 million of Series 2026-1 notes across two classes, sources told Artemis.Those notes will be offered and sold to catastrophe bond investors, with the goal of securing a multi-year source of fully-collateralized retro reinsurance protection from the capital markets to support the underwriting portfolio of Lumen Re Ltd.Through this debut Photon Re Ltd.

Series 2026-1 catastrophe bond sponsorship, Lumen Re is seeking retrocessional protection against the peak North American perils of named storms and earthquakes, on an industry loss trigger and annual aggregate basis over a four year term to the end of February 2030, we understand.A $75 million tranche of Class A notes are designed to provide annual aggregate industry-loss based protection against named storm events affecting US north-east states, as well as earthquake events affecting the US and Canada, we are told.The Class A notes feature a franchise deductible of 7.5 billion index points and would attach their coverage at 30 billion index points, exhausting at 40 billion.

Which gives them an initial attachment probability of 5%, an initial base expected loss of 4.34% and they are being offered to investors with price guidance of 8.5% to 9%.A $50 million tranche of Class B notes are designed to provide Lumen Re with annual aggregate industry-loss based protection against named storm and earthquake events covering the entirety of the US and Canada, sources said.The Class B notes also feature a franchise deductible of 7.5 billion index points, but would only attach their coverage at 95 billion index points, exhausting at 115 billion.

Which gives them an initial attachment probability of 5.65%, an initial base expected loss of 4.8% and they are being offered to investors with price guidance of 9.25% to 10%.This first Photon Re catastrophe bond seeks broad retrocessional protection across North American peak catastrophes for Lumen Re’s portfolios of risk, which will provide an effective industry-loss based hedging tool for the business underwritten on behalf of the LGT ILS funds, it seems.It’s interesting to see another ILS manager linked underwriting vehicle seeking protection from the capital markets through a cat bond at this time, further underscoring the value and price differential of multi-year coverage that is perceived in a cat bond market that is executing strongly, particularly in index trigger deals at this time.

You can read all about this new catastrophe bond and over 1,000 other cat bond transactions in our extensive Artemis Deal Directory..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.