A private catastrophe bond issued through German reinsurance firm Hannover Re’s segregated accounts vehicle, Kaith Re Ltd. has had its maturity extended. The $50 million Seaside Re 2017-3 cat bond was due to mature this week, but maturity for the full tranche has been pushed to February 8th, suggesting it may face potential losses.
The $50 million Seaside Re 2017-3 private cat bond was issued by Hannover Re’s reinsurance vehicle Kaith Re Ltd. in January 2017, acting on behalf of the segregated account Seaside Re to issue a single $50 million tranche of Series 2017-3 private cat bond notes for ILS investors.
It was part of an issuance of a trio of Seaside Re 2017 private cat bonds, but only this one has had its maturity extended, we understand, which suggests that there could be some time required for loss development, to clarify whether losses are faced and to identify whether investors in the notes will receive all of their investment principal back when the notes are finally allowed to mature.
The Seaside Re bond program provides investors with access to U.S. property catastrophe reinsurance risks, so it is safe to assume that the private cat bond would have been exposed at least to the three major hurricanes of 2017, possibly to the wildfires in California as well (if a multi-peril arrangement).
The maturity date on the notes, which had been scheduled for January 15th has now been pushed back to February 8th.
That’s not a long extension, so it is possible there is another reason aside from the potential for the notes to face losses.
Artemis reached out to Hannover Re but a spokesperson explained that they could not comment due to confidentiality agreements that are in place.
We’ll update you should we hear anymore on the fate of this Seaside Re 2017-3 private cat bond.