Swiss Re Insurance-Linked Fund Management

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Leine Re

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.


Leine Re – At a glance:

  • Issuer: Leine Re
  • Cedent / sponsor: Gebäudeversicherung Bern (GVB)
  • Placement / structuring agent/s: GC Securities was sole placement agent
  • Risk modelling / calculation agents etc: ?
  • Risks / perils covered: Swiss property catastrophe risks
  • Size: $71m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Dec 2014

Leine Re – Full details:

This private catastrophe bond or ILS bond transaction again sees Hannover Re acting as risk transformer and ILS facilitator using its Kaith Re, a Bermuda Class 3 insurer and segregated accounts company.

In this deal Kaith Re, on behalf of its segregated cell Leine Re, transformed a (presumably property catastrophe) reinsurance contract from an unknown cedent into an insurance-linked security which was sold to a single ILS investor CHF 70m (approx. $71m) of notes.

The underlying reinsurance contract does not cover Hannover Re’s risks, rather this deal sees Hannover Re acting as a risk transformer using its Class 3 insurer and segregated accounts vehicle Kaith Re to offer a cedent a private cat bond or ILS facility to effect the deal, between cedent and investor.

The Leine Re ILS issuance program and the CHF 70m of notes issued have been listed on the Bermuda Stock Exchange.

CHF 70m (approximately $71m) of securities were listed on the Bermuda Stock Exchange (BSX) under the listing classification Section V as insurance related securities which were issued by Kaith Re Ltd. acting in respect of a Segregated Account named as Leine Re. The CHF 70m of ILS notes are due for maturity on the 15th January 2015.

The segregated account, “Leine Re”, was set up on the 19th November 2014, for the purpose of issuing the Notes and entering into a retrocession agreement with Hannover Re, a Trust Deed and other related agreements and activities.

It’s possible that the Leine Re notes cover a renewal deal with the protection beginning on the 1st January and running for one year, given the notes due date of 15th Jan 2016, however again we cannot confirm.

Update 1:

The recent CHF 70m ($71m) Leine Re private catastrophe bond transaction, which was issued through Hannover Re’s Kaith Re Ltd. segregated accounts company, was ultimately ceded by and benefits Swiss canton insurer Gebäudeversicherung Bern (GVB).

A press release from Guy Carpenter’s capital markets arm, GC Securities, which acted as the sole placement for the issuance of the Leine Re private cat bond, reveals some new information including the fact that Swiss insurer GVB is ultimately the beneficiary of the protection the cat bond provides.

GVB is a private property insurer established by law to provide mandatory insurance coverage against fire and weather-related damage for all buildings in the canton of Bern. The completion of the Leine Re private cat bond is the first time that the insurer has used the cat bond market to manage its risks.

The notes issued by Kaith Re Ltd., through its segregated account Leine Re, have been placed under Regulation S as Principal At-Risk Variable Rate Notes, with a due date of January 15, 2016. The notes have a notional principal at CHF70,000,000 and this is the first ever Swiss franc-denominated catastrophe bond to be issued.

Kaith Re is a Bermuda exempted company registered as a Class 3 insurer and a segregated account company owned by German reinsurer Hannover Re. Kaith Re Ltd. is increasingly being used for facilitating private catastrophe bond issuance and risk transformation for ILS deals as Hannover Re positions itself as one of the leading ILS facilitators.

In the case of the Leine Re private cat bond, Kaith Re acted on behalf of the segregated account Leine Re to issue the notes and ultimately provide capital markets protection to GVB via the Swiss Franc-Denominated Private Catastrophe Bond (“Gurten”).

The private cat bond’s protection is positioned alongside traditional reinsurance cover on each layer of GVB’s traditional reinsurance program. The transaction provides one year of annual aggregate cover to GVB on identical coverage terms to its traditional reinsurance program terms.

Interestingly, the deal involved two of the world’s leading ILS managers from Switzerland, LGT ILS Partners Ltd. and Schroders Investment Management [Switzerland] AG. These key investors were involved early in the issuance process, which streamlined the implementation of the cat bond.

The end result was to efficiently provide GVB with a source of capital markets-backed reinsurance protection covering Swiss natural peril catastrophe risk, which GC Securities said is “highly competitive” compared to its traditional reinsurance placement.

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