AXA XL, the global specialty insurance and reinsurance arm of the AXA Group, has been back in the catastrophe bond market in recent weeks, securing $67.5 million of retrocessional protection from a now-priced Galileo Re Ltd. (Series 2026-1) issuance that we have been told was more privately offered than its previous deals.
We are told that ultimately the $67.5 million of cat bond notes will provide a source of industry loss based retrocession to protect the XL Bermuda Ltd. underwriting entity.
That’s the same entity AXA XL has used as a cedent in all of its recent catastrophe bond issues, the most recent couple being a $375 million Galileo Re Ltd. (Series 2023-1) in December 2023 and a $175 million Galileo Re Ltd. (Series 2025-1) in December of last year.
In fact, all of the recent catastrophe bonds for AXA XL have been issued around the end of the year, so this more privately offered Galileo Re Series 2026-1 cat bond is less typical for the sponsor, but perhaps reflects its appetite to capitalise on pricing conditions in the capital markets to lock-in additional hedging capacity.
AXA XL has utilised its typical Bermuda based special purpose insurer for this catastrophe bond, with Galileo Re Ltd. the structure used to issue the notes, we are told.
Galileo Re Ltd. offered a single Class A tranche of Series 2026-1 cat bond notes to investors, with the proceeds to be used to collateralize a retrocessional reinsurance agreement between the issuer and the ceding company, which we understand to be XL Bermuda Ltd.
AXA XL’s other recent cat bonds have also provided protection to other underwriting entities, such as its Lloyd’s syndicate and other specialty re/insurance entities of the company, so it’s possible this Series 2026-1 issuance does as well.
We don’t know too much about the coverage these notes will provide, given the privately placed nature of the cat bond deal.
But we are told they feature an industry loss index trigger, which would make sense given that is how AXA XL tends to access limit from the cat bond market.
We do not know if they are occurrence or aggregate, in form of coverage, or what perils they will cover for the re/insurer. AXA XL’s cat bonds have covered North American peak perils in some cases, but in others they have featured European and further afield peak catastrophe exposure as well, so it’s hard to know at this time.
The $67.5 million of notes that are now set to be issued will provide AXA XL with industry loss based retrocessional protection over an almost two year term, with maturity due in early June 2028, sources said.
The $67.5 million of Galileo Re 2026-1 Class A notes were priced to pay investors an initial risk interest spread of 6%, we are told.
That’s all the information we have on this new catastrophe bond that will benefit AXA XL. We may be able to source additional details in future, in which case we will update the Deal Directory entry.
It’s good to learn that AXA XL has returned to the catastrophe bond market, to expand on its retrocessional hedging protection with the help of the capital markets.
You can read all about AXA XL’s new Galileo Re Ltd. (Series 2026-1) transaction to our Deal Directory, where you can analyse details of almost every catastrophe bond ever issued.
