3264 Re Ltd. (Series 2025-2)

Hannover Re is back in the capital markets to sponsor what will become its fifth catastrophe bond designed to provide it with retrocession using its Bermuda-based special purpose insurance vehicle 3264 Re Ltd.

For its latest catastrophe bond under the Bermuda based 3264 Re Ltd. vehicle, Hannover Re is focusing on securing more retrocessional reinsurance for peak perils in the United States and Canada, we are told.

3264 Re Ltd. is set to offer a single tranche of Class A Series 2025-2 notes to cat bond investors, with the proceeds from their sale set to collateralize a reinsurance agreement to benefit sponsor Hannover Re.

The notes will provide Hannover Re with both multi-year per-occurrence coverage for northeast US named storms and also annual aggregate retrocessional reinsurance for North American earthquakes, running over three years and three risk periods for the agg sectionfrom June 1st, we understand.

Both sections of coverage will use an industry-loss trigger, with a franchise deductible in place for the aggregate quake coverage, and both named storm and quake being based on industry losses reported by PCS for personal, commercial and auto lines of business, sources said.

The North America named storm cover is for northeast and eastern states including the District of Columbia, Connecticut, Delaware, Georgia, Maine, Maryland, Massachusetts, North Carolina, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, South Carolina, Virginia, and Vermont, while the earthquake protection is for all 50 US states, DC and Canada.

Currently, the Class A Series 2025-2 notes that 3264 Re is set to issue are sized at $100 million.

The notes have an initial attachment probability of 4.22%, an initial base expected loss of 3.68% and are being offered to cat bond investors with price guidance in a range from 8.25% to 9%.

Update 1:

We’re told that the size target for this new 3264 Re Series 2025-2 catastrophe bond for Hannover Re remains unchanged, at $100 million.

But the price guidance has been reduced, to an updated spread range of 7.5% to 8.25%.

Update 2:

We’re now told that the size target for this 3264 Re Ltd. Series 2025-2 catastrophe bond for Hannover Re has increased, with now $150 million of limit sought.

At the same time, the price guidance has now been moved to the lower end of the updated range, for a spread of 7.5%.

Update 3:

Hannover Re secured the upsized target of $150 million of peak peril retrocessional reinsurance from this new 3264 Re Ltd. Series 2025-2 catastrophe bond.

The $150 million of Class A Series 2025-2 notes were priced at 7.5%, so for a spread to be paid that is some 13% below the initial guidance range mid-point.