LI Re (Series 2023-1)

Hannover Re has used its Bermuda domiciled reinsurance transformer vehicle Kaith Re Ltd. to issue this new $15 million LI Re 2023-1 private cat bond, acting on behalf of its segregated account named LI Re.

This new $15 million LI Re 2023-1 private cat bond, transforms and securitises the underlying reinsurance related contract risks contained in the segregated account, and is scheduled for maturity on October 15th 2025, so could represent a two-year reinsurance arrangement.

That’s a little unusual, as most private cat bonds have a one-year duration at most, making this less typical but perhaps a sign of the private transactions being increasingly accepted by investors and therefore able to become more useful to cedents.

As with all previous LI Re private cat bonds, this latest LI Re 2023-1 issuance transfers California earthquake risk to the capital markets, so providing an unknown cedent with collateralized reinsurance or retrocessional protection for that peril, that could be running over a two-year term.

This new $15m of LI Re Series 2023-1 private cat bond notes have been listed on the Bermuda Stock Exchange (BSX) as Section V – Insurance Related Securities, with Ocorian Securities (Bermuda) Ltd. acting as the listing sponsor, and were sold to qualified institutional investors.

The underlying transaction for this private cat bond will most likely be a collateralized reinsurance arrangement, or perhaps an industry loss warranty (ILW), covering the peril of California earthquake risk, which is typical of private cat bond arrangements. Further details of the exact nature of the transaction are unavailable at this time.