Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

$10m California quake cat bond lite issued by Hannover Re vehicle


German reinsurance giant Hannover Re has assisted with and issued another private catastrophe bond transaction, or cat bond lite, with the issuance of a $10 million California earthquake risk exposed LI Re (Series 2018-1) deal for an unknown cedent and certain ILS investors.

Hannover Re has been busy using its Kaith Re transformer vehicle to facilitate the securitisation of reinsurance and retrocessional risks for investors and cedants.

Including this new LI Re private cat bond, Hannover Re has now assisted in the issuance of $97 million of securitised risk to investors just in the last week.

This is the first LI Re transaction since a year ago and it covers the same risks of California earthquake, for the same duration with the same due date as well, suggesting it is likely a renewal of the same reinsurance or retrocession arrangement.

In this latest LI Re private cat bond, LI Re (Series 2018-1), $10 million of notes have been issued through Hannover Re’s segregated accounts vehicle, Kaith Re Ltd., acting on behalf of its segregated account named LI Re as part of the LI Re bond program.

This segregated account LI Re 2018-1 private cat bond, which transforms and securitises underlying reinsurance risks contained in the account, is due April 10th 2020, the same date as the maturing 2017 transaction.

This LI Re private cat bond provides a cedent with collateralized reinsurance or retrocession protection covering losses from California earthquake risks.

The underlying transaction will be a one year collateralized reinsurance or industry loss warranty (ILW) deal, as are most common with these private cat bonds. Further details on the exact nature of this transaction are unavailable, however.

The $10m of LI Re Series 2018-1 private cat bond notes issued through Kaith Re Ltd. have been listed on the Bermuda Stock Exchange (BSX) as Section V – Insurance Related Securities.

Hannover Re, in facilitating this private ILS deal, acts as a service provider to gain fee income by providing the transformer, fronting reinsurer or facilitator service for private cat bond issues, using the cells of its Bermuda segregated accounts insurer Kaith Re.

We’ve added this new $10 million LI Re (Series 2018-1) private cat bond to the Artemis Deal Directory and what information we have will be included in all of our catastrophe bond and ILS market statistics.

Register today for ILS NYC 2023, our next insurance-linked securities (ILS) market conference. Held in New York City, February 10th, 2023.

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