Many of the Seaside Re private catastrophe bond transactions that were issued by German reinsurance firm Hannover Re’s segregated accounts vehicle, Kaith Re Ltd. have seen their maturities extended and the entire Series 2022 group of cat bonds have now been extended for the first time.
In total, close to $159 million of outstanding Seaside Re private cat bonds had their maturities extended this week.
Earlier this year, some $75.5 million of Seaside Re private cat bonds had their maturity dates extended until January 15th 2023, to allow for ongoing development of catastrophe loss events.
Of that group, $50.25 million of notes across five series issued have now been extended further out to July 15th 2023.
Those are the:
- $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)
It’s uncertain which loss events have caused these extensions, but it’s possible the Series 2021 notes are on-watch for updates the industry loss estimates for hurricane Ida.
Now though, a further $108.5 million of Seaside Re private cat bond notes have also had their maturity dates extended to April 15th 2023.
This is every series of Seaside Re notes issued so far this year and it seems safe to assume that hurricane Ian has been the driver for these notes all being extended.
These issuances are:
- $24m – Seaside Re (Series 2022-1)
- $10m – Seaside Re (Series 2022-11)
- $10m – Seaside Re (Series 2022-12)
- $5m – Seaside Re (Series 2022-21)
- $5m – Seaside Re (Series 2022-22)
- $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)
So there are now just under $159 million of private Seaside Re cat bond notes still on-risk for potential loss development through into 2023, with these Series 2022 potentially set to remain extended for quite a period of time, judging by the length of extensions seen for notes issued in 2021 and prior.
It is possible these are aggregate reinsurance or retrocession structures, in which case there are likely a number of qualifying loss events still developing.
The ultimate beneficiary of the protection could be reinsurance firm Hannover Re itself, as these Seaside Re private cat bonds may have been used as a way for investors to access its retrocession program in a securitized manner, or they could be counterparties Hannover Re has fronted the risk for, to pass on capital markets protection to them.
Hannover Re is an important facilitator in the catastrophe bond market, helping investors access reinsurance related risk and return in securitized form and cedents to access the capital markets, through acting 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.