$110m of private cat bonds from Hannover Re’s Seaside program extended again

Seaside Re private catastrophe bond transactions from the 2020, 2021, and 2022 vintages continue to have their maturity dates extended, to allow for ongoing development of catastrophe losses that could trigger them, with almost $110 million of notes having their maturity extended out to mid-October.

We’ve covered the repeat extensions of maturity for some of the Seaside Re private catastrophe bond transactions, that were issued by German reinsurance firm Hannover Re’s segregated accounts vehicle, Kaith Re Ltd., over recent months.

Close to $159 million of outstanding Seaside Re private cat bonds had their maturities extended back in December 2022.

But then $39 million of the 2022 vintage Seaside Re catastrophe bonds were allowed to mature, presumably as it was deemed they could not be recovered from.

However, $119.75 million of Seaside Re private cat bonds, across 2020, 2021, and 2022 vintages, were left extended, so presumably still exposed to potential losses, awaiting development and greater clarity before capital can be returned to investors, or any realised losses be paid.

With the Series 2022 private cat bond tranches from Hannover Re’s Seaside Re program, we assume they are at-risk of being impacted by losses related to hurricane Ian, which was the largest catastrophe loss event of the last year and continues to develop for many re/insurers.

With the remaining 2020 and 2021 vintage Seaside Re private cat bonds, these are presumably exposed to catastrophe losses from their years of issuance, given almost every Seaside Re cat bond has provided reinsurance or retro coverage for a year at most.

As a result, some of these notes have now been extended for quite a long time, with this now continuing with the latest extension of maturity, which was through to July 15th 2023.

The following Seaside Re cat bond series have now all had their maturity dates extended through to October 15th, to allow for continued development:

• $7.5m – Seaside Re (Series 2020-41)
• $4m – Seaside Re (Series 2021-21)
• $5m – Seaside Re (Series 2021-23)
• $30m – Seaside Re (Series 2021-31)
• $3.75m – Seaside Re (Series 2021-41)
• $5m – Seaside Re (Series 2022-21)
• $4.5m – Seaside Re (Series 2022-23)
• $30m – Seaside Re (Series 2022-31)
• $8.5m – Seaside Re (Series 2022-41)
• $11.5m – Seaside Re (Series 2022-42)

Which together total $109.75 million in risk capital outstanding.

One additional series that we had included in our last coverage on these extensions, the $10m of Seaside Re (Series 2022-11) notes, have not been updated and so remain extended to July 15th. So we’ll have to see whether those are allowed to mature at that time. Update: These 2022-11 notes matured and were redeemed on schedule.

It’s never been particularly clear whether these Seaside Re cat bonds provide protection directly to Hannover Re itself, a form of retrocessional reinsurance, or whether they are issued on behalf of clients of the company, as it continues to facilitate access to the capital markets for those seeking reinsurance protection.

Hannover Re is one of the most important facilitators in the catastrophe bond market, helping investors access reinsurance related returns in securitized form, and ceding clients to access the capital markets.

The reinsurer acts as a risk transformer and facilitator for 144A cat bonds, private catastrophe bonds and other insurance-linked securities (ILS).

In 2022, Hannover Re’s Kaith Re vehicle issued nine Seaside Re private catastrophe bonds tranches, totalling $108.5 million of risk transferred and securitized, as well as one LI Re private cat bond which transferred $15 million of California earthquake risk.

In 2023 so far, Hannover Re’s Kaith Re vehicle issued four Seaside Re private cat bonds, totalling $49 million of risk capital issued.

Hannover Re expanded the volume of collateralised reinsurance business that it acted as a front or transformer for in 2022, with ceded limit under those activities rising 36% to almost EUR 6.2 billion for the year.

Details of every private catastrophe bond we’ve tracked can be found in our Deal Directory, which you can filter by type of transaction making it simpler to view only private cat bond issuances.

View our chart that breaks down issuance of catastrophe bonds by year and type, so you can analyse private cat bond issuance by year.