Totara Re (Toka Tū Ake EQC, 2023)
The first cat bond originated in New Zealand: 225 million New Zealand dollars issued through Singapore in 2023 for the public natural disaster insurer, Toka Tū Ake EQC.
Toka Tū Ake EQC insures New Zealand homes by statute against earthquake and other natural perils, and the government guarantees its obligations: every loss it does not transfer ends up in the public accounts. After the 2010 and 2011 Canterbury earthquakes, its reinsurance program became very large relative to the size of the country, and its cost followed the hardening market after 2022. A cat bond diversifies the sources of capital: it adds investors who do not depend on the reinsurance cycle, with fully paid collateral and a four-year term that locks in the price. The issue runs through a Singapore vehicle rather than Bermuda, a center close to the region that is working to attract such deals. The limit is size: the layer remains small next to the traditional tower, which it supplements without replacing.
Placed in May 2023 through the Singapore vehicle Totara Re (Series 2023-1), the note provided 225 million New Zealand dollars, against 250 million targeted at launch, of per-occurrence indemnity cover through the end of May 2027 for earthquake, tsunami, landslide, volcanic eruption, hydrothermal activity, storm and flood, alongside EQC's traditional reinsurance.
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