Further extension for $69.5m of Hannover Re’s Seaside Re private cat bonds

There has been a further extension of maturity for a number of the 2022 vintage Seaside Re private catastrophe bond transactions that were issued by German reinsurance firm Hannover Re’s segregated accounts vehicle, Kaith Re Ltd., but some have now been allowed to mature, indicating greater clarity over the covered loss events.

As we’d reported before, close to $159 million of outstanding Seaside Re private cat bonds had their maturities extended back in December 2022.

Within those were $108.5 million of the 2022 vintage issuances of Seaside Re private cat bond notes, that had their maturity dates extended to April 15th 2023.

Now, three of those 2022 issued Seaside Re private cat bonds, totalling $39 million in risk capital, have been allowed to mature and investors have redeemed their allocations to them we understand, namely the following issues:

• $24m – Seaside Re (Series 2022-1)
• $10m – Seaside Re (Series 2022-12)
• $5m – Seaside Re (Series 2022-22)

But the remaining $69.5 million have now had their maturity dates further extended, to July 15th 2023, presumably to allow for further development of the loss activity that has the potential to threaten those private cat bonds, listed below:

• $10m – Seaside Re (Series 2022-11)
• $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)

All of these Series 2022 private cat bond tranches from Hannover Re’s Seaside Re program are presumably at-risk of being impacted by losses related to hurricane Ian, the largest catastrophe loss event of the last year.

It seems safe to assume that hurricane Ian is the driver for these notes all having their maturities extended again, given the magnitude of that loss event and the fact it continues to develop for many cedents.

It’s not 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.

Another $50.25 million of Seaside Re private cat bond notes, across five series issued, also remain with their maturities also extended to July 15th 2023 at this time:

• $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)

So in total there are $119.75 million of Seaside Re private cat bonds still exposed to potential losses, awaiting development and greater clarity before capital can be returned to investors, or any realised losses be paid.

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.

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

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.