$86.5m Seaside Re private cat bond issued by Hannover Re’s Kaith Re

by Artemis on January 6, 2017

A new $86.5 million Seaside Re (Series 2017-1) private catastrophe bond, or cat bond lite, transaction, has been issued by German reinsurance firm Hannover Re’s segregated accounts vehicle, Kaith Re Ltd.

Hannover Re has been regularly helping ceding companies to access capital markets capacity, and ILS investors or funds to transact private cat bond deals, securitising reinsurance risks using its Kaith Re Ltd. Bermuda domiciled segregated accounts vehicle.

This Seaside Re private cat bond or insurance-linked security (ILS) saw Kaith Re Ltd. acting for its segregated account named Seaside Re to issue a Seaside Re bond program and three tranches of Series 2017-1 private cat bond notes.

The Seaside Re private cat bond issuance features a Series 2017-1 tranche A bond sized at $27 million, a 2017-2 bond sized at $9.5 million and a 2017-3 bond sized at $50 million. All three of the tranches are due January 15th 2018, so likely represent an annual reinsurance or industry loss warranty (ILW) contract transacted around the January 2017 renewal season.

Seaside Re’s three tranches combined add up to $86.5 million, which makes this issuance through Kaith Re the largest private cat bond facilitated by Hannover Re that we’ve covered to date.

As with all the other private cat bonds Kaith Re has issued, we assume that the Seaside Re notes cover property catastrophe risks,  given the dominance of those perils in the ILS market, but details of the exact nature of this transaction are unavailable at this time.

The three tranches of Seaside Re 2017-1 notes totaling $86.5 million have been admitted for listing on the Bermuda Stock Exchange (BSX) as Section V – Insurance Related Securities and have been placed with qualified investors.

These private cat bond deals help ILS funds and investors to access reinsurance risks in securitised form, meaning the ILS investor can participate in a reinsurance renewal and receive an asset that meets its mandate and needs for a fully securitised ILS note, rather than a collateralised reinsurance contract.

Hannover Re benefits from playing a role in transactions that could have bypassed the traditional reinsurance firm, while gaining fee income by acting as a transformer, fronting reinsurer or facilitator for ILS deals and private cat bond note issues, using the segregated cells of its Bermuda segregated accounts insurer Kaith Re.

We’ve added this Seaside Re (Series 2017-1) private cat bond 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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