Hannover Re adds nearly $75m more Seaside Re cat bond lites

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Global reinsurance firm Hannover Re has added another almost $75 million of risk capital to its Seaside Re private catastrophe bond issues for 2020 through another seven transactions, taking the total issued around this January renewal season to $151.5 million.

seaside-beachIt’s around the same amount of risk capital issued using the Seaside Re segregated account private cat bond program as a year earlier, but with one more transaction brought to market in 2020.

Yesterday, seven new Seaside Re transactions were admitted for listing as insurance-related securities on the Bermuda Stock Exchange (BSX).

They were: a $3.75m Seaside Re (Series 2020-11); a $5.75m Seaside Re (Series 2020-12); a $10m Seaside Re (Series 2020-21); a $5m Seaside Re (Series 2020-22); a $30m Seaside Re (Series 2020-31); a $7.5m Seaside Re (Series 2020-41); and a $12.5m Seaside Re (Series 2020-42) transaction.

As ever, it’s difficult to tell what year some of these private cat bonds fall into, so we tend to include them in our Deal Directory as and when the information becomes available to us.

These seven new Seaside Re cat bond lites all appeared yesterday and reflect Hannover Re’s continued activity as a facilitator of private insurance-linked securities (ILS) transactions and a cedant of risks to capital market investors.

By facilitating ILS investors access to risk and helping clients access the capital markets, as well as ceding some of its own risks to third-party capital, Hannover Re has an excellent view of investor appetite at any one point in time making it an attractive market facilitator to work with.

It’s also of note that Hannover Re returned to the catastrophe bond market this week for its own retrocession, the first transaction like that in a number of years.

For each of these Seaside Re private cat bonds, Hannover Re’s transformer vehicle Kaith Re Ltd. has acted on behalf of its segregated account named Seaside Re to issue the series of notes.

The proceeds from the sale of each series of notes to cat bond investors will have been used as collateral to support an underlying reinsurance or retrocession agreement for the ceding re/insurer and ultimate beneficiaries of the protection.

The $3.75 million Series 2020-11 and $5.75 million Series 2020-12 tranches of notes issued by Seaside Re are both exposed to U.S. property catastrophe risks and have a due date of January 6th 2021, so likely represent a one year collateralized reinsurance or industry loss warranty (ILW) transaction, as are most commonly seen with private cat bonds.

The due-date being the same suggests these two could be layers of the same transaction.

Meanwhile, the $10m Series 2020-21, $5m Series 2020-22, $30m Series 2020-31, $7.5m Series 2020-41 and $12.5m Series 2020-42 tranches are also likely exposed to U.S. property catastrophe risks and all have a due date of January 15th 2021. So again, these five also likely represent a one year collateralized reinsurance or industry loss warranty (ILW) transaction and could be layers of the same program. The due date also matches other recent issues as well, suggesting they could even be from Hannover Re’s own retrocession program perhaps.

The Seaside Re private cat bond program offers ILS investors a mechanism through which they can access certain U.S. property catastrophe risks in a cat bond lite fully securitised form, with the potential for secondary liquidity and ability to meet certain of their investment and fund mandates.

As with all these private ILS deals, full details of the transaction and underlying reinsurance or retrocessional coverage they provide are not available to us.

We’ve added all seven of these new Seaside Re private cat bonds to the Artemis Deal Directory and the detailed information we have will also be included in all of our catastrophe bond and ILS market statistics.

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