Hannover Re, the top-four global reinsurance firm, has facilitated issuance of another $27 million of private catastrophe bonds under the Seaside Re program, as it continues to help ceding companies and investors transact ILS deals in securitised note form.
Hannover Re plays an important role in the insurance-linked securities (ILS) market, as fronting and risk transformation service provider, enabling ceding re/insurers to access the capital markets for reinsurance or retrocession and investors to access the insurance-linked risks they seek in a fully securitised form.
The reinsurance firm has already facilitated a $10 million LI Re private insurance-linked securities (ILS) transaction and a $50 million Seaside Re 2020-51 private cat bond in recent days, in time for the January 2020 renewal.
Hannover Re acts as a facilitator in the ILS and catastrophe bond market, helping ceding companies and investors to transact in securitised note form using its Kaith Re Ltd. Bermuda domiciled segregated accounts vehicle.
These Seaside Re cat bond lites are a familiar feature of the ILS market now, with renewal issuances from Hannover Re’s vehicle each year since early 2017 now featured in our Deal Directory.
For the Seaside Re 2020-1 and 2020-2 private cat bonds, Hannover Re’s reinsurance transformer vehicle Kaith Re Ltd. acted on behalf of the segregated account named Seaside Re to issue the $7 million tranche of Series 2020-1 notes and $20 million tranche of Series 2020-2 notes, with the proceeds from the sale of the notes to investors used as collateral to support an underlying reinsurance or retrocession agreement for the ceding re/insurer and ultimate beneficiaries.
The Series 2020-1 and Series 2020-2 notes issued by Seaside Re both have a due date of January 15th 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 Jan 15th due date is identical to other recent Seaside Re cat bond transactions, suggesting they support layers of the same program. This is most likely aligned with Hannover Re’s own retrocessional reinsurance program, so this now growing series of securitised private cat bond notes enable investors to access insurance-linked returns underwritten by and sourced from the reinsurer.
The Seaside Re private cat bond program offers a way for ILS investors to access certain U.S. property catastrophe risks in cat bond lite securitised form with the potential for secondary liquidity and meeting certain of their investor 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 both the new Seaside Re (Series 2020-1) and Seaside Re (Series 2020-2) private cat bonds to the Artemis Deal Directory and what information we have will be included in all of our catastrophe bond and ILS market statistics.