Hannover Re in $10m LI Re 2016-2 private cat bond via Kaith Re

by Artemis on December 22, 2016

German reinsurance firm Hannover Re has facilitated another private catastrophe bond (or cat bond lite) transaction, a $10 million LI Re (Series 2016-2), with the notes issued through its segregated accounts vehicle, Kaith Re Ltd. listing on the Bermuda Stock Exchange (BSX).

Hannover Re continues to facilitate insurance-linked securities transactions, enabling investors and ILS funds to access business in private ILS and catastrophe bond form for some years now, with a number of transactions issued through the reinsurance firms Kaith Re Ltd. Bermuda segregated accounts vehicle.

In this latest LI Re private cat bond, LI Re (Series 2016-2), $10 million of notes ($9.99999 to be precise) have been issued by Kaith Re Ltd., acting on behalf of its segregated account LI Re. This is the second largest LI Re private ILS from Hannover Re’s Kaith Re seen to date. The segregated account LI Re 2016-2 private cat bond is due April 1st 2018.

As with all the other LI Re private cat bonds we assume that these notes cover property catastrophe risks,  given the focus on those perils among ILS investors, but details of the exact nature of this transaction are unavailable.

The $9.99999m of LI Re Series 2016-2 private cat bond notes have been listed on the Bermuda Stock Exchange (BSX) as Section V – Insurance Related Securities.

We assume that this relatively small, privately transacted and placed cat bond, represents an ILS investor’s participation in a reinsurance renewal contract, with the risk being securitised in order to meet the investors mandate and needs for a fully securitised ILS note, rather than a collateralised reinsurance contract.

Acting as a transformer, fronting reinsurer and facilitator for ILS deals and private cat bond note issues, with the securitization of segregated cells of its Bermuda segregated accounts insurer Kaith Re one route, helps Hannover Re to revenue from the ILS market that adds to its income.

This LI Re (Series 2016-2) private cat bond has been added to the Artemis Deal Directory, however it will not be fully included in all of our catastrophe bond and ILS market statistics due to the lack of available information.

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