Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Commonwealth Re Ltd. (Series 2022-1)

The Artemis Catastrophe Bond and Insurance-linked Securities Deal Directory aims to provide a one-stop resource for information on every cat bond and ILS transaction we hold information on. The content of this Deal Directory is provided as is and there will be some omissions. Help us to keep these cat bond and ILS transaction summaries up to date by contacting us if you see an error or omission that you can correct.

Share

Commonwealth Re Ltd. (Series 2022-1) – At a glance:

  • Issuer: Commonwealth Re Ltd.
  • Cedent / sponsor: The Hanover Insurance Group
  • Placement / structuring agent/s: GC Securities is sole structuring agent and bookrunner
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: Northeast U.S. named storm
  • Size: $150m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Jun 2022

Commonwealth Re Ltd. (Series 2022-1) – Full details:

This is US primary insurer The Hanover Insurance Group, Inc.’s first ever catastrophe bond.

The Hanover has registered a new Bermuda company named Commonwealth Re Ltd. that is expected to be licenced in time as a special purpose insurer (SPI), for use as a catastrophe bond issuance vehicle.

Commonwealth Re Ltd. is aiming to issue a $100 million or greater tranche of Series 2022-1 notes, that will be sold to investors and the proceeds used to collateralize a reinsurance agreement between the vehicle and The Hanover.

The reinsurance will protect numerous of The Hanover Insurance Group’s subsidiary insurance companies against certain losses from named storms (so tropical storms and hurricanes, as well as related perils) on a per-occurrence and indemnity trigger basis over a three year period.

The covered area are the US northeast states that typically feature in a named storm cat bond focused on that part of the country, we understand.

We’re told the notes reinsurance coverage would attach at $1.3 billion of losses to The Hanover and its subsidiaries, exhausting at $1.45 billion, meaning this first Commonwealth Re cat bond could upsize to as much as $150 million if pricing and terms are conducive.

The $100 million of Series 2022-1 Class A notes come with an initial expected loss of 0.54% at the base case, we understand, and are being offered to cat bond investors with price guidance in a range from 3.5% to 4%.

Update 1:

The Hanover looks set to upsize its debut catastrophe bond, with the Class A notes now sized as a $150 million issuance.

At the same time the price guidance has been tightened, to between 3.25% and 3.75%.

Update 2:

In the end, The Hanover secured the upsized $150 million of reinsurance from its first Commonwealth Re catastrophe bond.

The pricing was eventually finalised to pay investors a coupon of 3.5%, which is the bottom of the initial guidance range.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

« Go back to the Catastrophe Bond Deal Directory

Help us keep this valuable resource up to date. If you have information on a catastrophe bond or insurance-linked security deal we have not covered or can see something that we should change, please contact us to let us know.