Hannover Re facilitates two Seaside Re private cat bonds worth $27m

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Global reinsurance firm Hannover Re has successfully assisted a client by facilitating the issuance of two new Seaside Re private catastrophe bonds through its Kaith Re Ltd. Bermuda domiciled segregated accounts vehicle, bringing $27 million of U.S. property catastrophe risks to ILS investors.

The transactions are a $7 million Seaside Re (Series 2019-1) private cat bond and a $20 million Seaside Re (Series 2019-2) issuance.

Both have been issued through Hannover Re’s reinsurance transformer vehicle Kaith Re, which it uses to facilitate access to the capital markets for cedants and clients.

These are the seventh and eighth series and tranches issued under the Seaside Re private cat bond program, since it began supporting these transactions in late 2016.

Both of the transactions are exposed to losses from U.S. property catastrophe risks, as the majority of the Seaside Re private cat bond program are.

With these two transactions, Hannover Re helps a cedant share its risk with the capital markets and an investor to access U.S. property catastrophe risks in a securitised, cat bond note form.

The reinsurer earns fees for services rendered and also gets to manage its own peak catastrophe risks with the help of the ILS market.

The 2019-1 issuance saw Kaith Re Ltd. acting on behalf of its segregated account named Seaside Re to issue a single $7 million tranche of Series 2019-1 private cat bond notes for the investor(s).

The 2019-2 issuance saw Kaith Re Ltd. acting on behalf of its segregated account named Seaside Re to issue a single $20 million tranche of Series 2019-2 private cat bond notes for the investor(s).

Both of the series of notes have been issued pursuant to the Seaside Re bond program.

Both of the series of notes are due January 15th 2020, so likely represent a one year collateralized reinsurance or industry loss warranty (ILW) transaction, as are most common with private cat bonds.

The due date of Jan 15th is the same as seen with previous Seaside transactions, suggesting these two are renewals of the 2018-1 and 2 arrangements, likely representing two layers of a collateralised reinsurance program.

The Seaside Re bond program provides ILS investors with access to U.S. property catastrophe risks in cat bond form, but further details of the exact nature of this transaction and the reinsurance or retrocessional coverage it provides are not available.

For Hannover Re the deals look like retrocession, but they also demonstrate the reinsurers growing work with ILS investors and third-party capital, as it acts as a conduit between cedants and the capital markets.

We’ve added the $7 million Seaside Re (Series 2019-1) and $20 million Seaside Re (Series 2019-2) private cat bonds to the Artemis Deal Directory and what information we have will be included in all of our catastrophe bond and ILS market statistics.

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