Seaside Re (Series 2020-42)

Hannover Re has assisted in another new private catastrophe bond transaction getting to market around the January 2020 renewals using its segregated accounts vehicle Kaith Re Ltd.

Hannover Re continues to play a facilitation role to help ceding companies gain access to capital market investors through transactions structured in cat bond lite form, as well as to facilitate investors access to its own portfolio of reinsurance risks.

For this new Seaside Re 2020-42 private cat bond, Hannover Re’s transformer vehicle Kaith Re Ltd. acted on behalf of its segregated account named Seaside Re to issue a $12.5 million tranche of Series 2020-42 notes.

The proceeds of the sale of the notes to cat bond investors will have been used as collateral to support an underlying reinsurance or retrocession agreement for the ceding re/insurer and ultimate beneficiaries of the protection.

The $12.5 million Series 2020-42 tranche of notes issued by Seaside Re are exposed to U.S. property catastrophe risks and have a due date of January 15th 2021, so likely represent a one year collateralized reinsurance or industry loss warranty (ILW) transaction, as are most commonly seen with private cat bonds.

The due-date is the same as a number of other Series 2020 tranches of notes that came to market around the renewals, suggesting they come from similar programs (perhaps Hannover Re’s own).

Hannover Re’s Seaside Re private catastrophe bond program provides ILS investors with a mechanism to access certain U.S. property catastrophe risks in cat bond lite securitised form, with the potential for secondary liquidity and ability to meet certain of their investor and fund mandates.

As with all private ILS and cat bond lite deals, the full details of the transaction and underlying reinsurance or retrocessional coverage they provide are not available to us.