Commonwealth Re Ltd. (Series 2026-1)

The Hanover Insurance Group, Inc. is back in the catastrophe bond in 2026, seeking what will be its fourth cat bond sponsorship under the Commonwealth Re Ltd. program.

Using Bermuda-based special purpose insurer Commonwealth Re Ltd., The Hanover Insurance Group is seeking at least $100 million of US-wide multi-peril and multi-year reinsurance protection from the capital markets, on a fully-collateralized basis with this fourth cat bond issuance.

Commonwealth Re Ltd. will issue a single tranche of Series 2026-1 Class A notes that are designed to provide reinsurance to The Hanover and subsidiary companies, covering the perils of US named storm, earthquake, severe thunderstorm, winter storm and wildfire, we are told.

The protection will be on an indemnity trigger and per-occurrence basis, with the reinsurance running across three years from July 1st through to the end of June 2029.

The currently $100 million of Series 2026-1 Class A notes that Commonwealth Re is offering to investors would attach their reinsurance above an initial attachment point of $1.1 billion of losses and exhaust their coverage at $1.25 billion in the reinsurance tower, sources said.

As a result, the $100 million or more in Class A notes will have an initial attachment probability of 1.3%, an initial base expected loss of 1.18% and they are being offered to investors with price guidance for a spread of between 3.25% and 3.75%.