Cumulus Re (Series 2025-1)

This is the second catastrophe bond in the Cumulus Re series for Hannover Re and so the second ever to specifically cover cloud outage risks, an area of the cyber reinsurance market where availability of coverage has been seen as lacking on a retrocessional basis.

This Cumulus Re Series 2025-1 catastrophe bond has been privately placed by Hannover Re’s own Bermuda-based structure and segregated accounts company, Kaith Re Ltd.

Kaith Re Ltd. issued $20 million of Cumulus Re 2025-1 notes which have been privately placed with cat bond investors, so are cat bond lite notes.

This new parametric cloud outage cat bond renews and upsizes the protection Hannover Re received from the first Cumulus Re cloud outage cat bond, a 2024 issuance that was $13.75 million in size.

That deal featured an issuance of Reg 4(a)(2) zero coupon notes by Kaith Re and we suspect this Cumulus Re 2025-1 issuance is likely to be the same.

As with the first transaction, of which this is a renewal, this Cumulus Re 2025-1 cloud outage catastrophe bond features a parametric trigger, which is based on the outages of major US cloud provider regions and designed by specialist risk modeller Parametrix.

Parametrix presumably also acts as the ongoing calculation agent for the deal, monitoring the occurrence of cloud outage events.

The Cumulus Re 2025-1 notes therefore provide Hannover Re with about one year of $20 million in capital markets backed collateralized retrocessional cyber reinsurance protection against major cloud outages, using a parametric trigger.

The maturity date will be April 14th 2026, aligned with the previous deal.

Hannover Re will benefit from $20 million of retrocessional cover that will trigger if the delivery of specific cloud services, in certain U.S. cloud regions, by one or more named cloud service providers, are interrupted in excess of a specified waiting period, just like the first deal.

We’re told the waiting period, so effectively the attachment metric for these notes, will be for a 24 hour cloud outage event.

These parametric cloud outage private cat bonds provide a form of per-occurrence retrocessional protection, covering Hannover Re against impacts to its underwriting portfolio from significant cloud outage events, on a parametric trigger basis.