Migdal Insurance Company Ltd., an Israeli insurance, pension and financial service company, is the latest first-time sponsor entrant to the catastrophe bond market, as it targets $100 million of earthquake reinsurance covering exposure in Israel through a new transaction, Artemis understands from sources.This year has seen an influx of first-time cat bond sponsors to the market, with 11 having deals that have already issued and settled, while one more is currently in the issuance process.But this one is also bringing an entirely new peril category to catastrophe bonds, as Migdal Insurance seeks capital markets backed reinsurance protection against earthquakes in Israel, Artemis has learned.A new Bermuda based company has been registered to act as issuer for Migdal Insurance’s debut catastrophe bond, named Turris Re Ltd.

Turris Re Ltd.will seek to issue a single Series 2025-1 tranche of Class A notes, that will be sold to investors and the proceeds used to collateralize a reinsurance agreement between it and the sponsor, Migdal Insurance.We understand the initial offering size is for $100 million of notes, that are designed to provide three year’s of fully-collateralized indemnity reinsurance protection.

As said, the covered peril is earthquakes that affect Israel and the notes are per-occurrence in nature.The currently $100 million tranche of Series 2025-1 Class A notes that Turris Re Ltd.is offering to investors would attach their reinsurance coverage at a loss of ILS 200 million and exhaust that protection at ILS 650 million, we understand.

The Class A notes come with an initial attachment probability of 0.51%, an initial expected loss of 0.27% and they are being offered to cat bond investors with price guidance for a spread in a range from 2.1% to 2.4%.It’s a relatively remote risk cat bond and given the fact this is a new peril to many cat bond fund managers and investors, the low spreads available could mean this first Turris Re cat bond may not appeal to everyone given the effort required to analyse a new peril of this kind.But, the market generally welcomes new peril opportunities for the diversification they can offer to investment portfolios and given the ample capital and investor interest in the catastrophe bond market, we expect there will be appetite to absorb this first deal for Migdal Insurance.

We understand that earthquake risk in Israel has featured in some private cat bond or insurance-linked securities (ILS) arrangements in the past, so it may not be an entirely new risk category to every investor in the market either.Interestingly, we wrote about a paper from Israel’s National Economic Council in which they cited catastrophe bonds as a potential solution to source reinsurance capacity to support the earthquake risk financing needs of the country, which resulted in further discussion at government levels but did not go anywhere at the time.You can read all about this new catastrophe bond and every other cat bond transaction issued in our extensive Deal Directory..

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