Hannover Re lifts 3264 Re 2025-3 retro cat bond target to $250m, largest in the series

Hannover Re is now looking to upsize on its initial target for North American peak peril retrocession through the 3264 Re Ltd. (Series 2025-3) catastrophe bond issuance, with the firm now seeking to secure $250 million of protection which makes this the largest cat bond in this series so far, Artemis can report.

Hannover Re came back to the cat bond market for what will be the sixth transaction in the 3264 Re series of deals in November, with an initial target to secure $200 million of retrocessional reinsurance from this offering of notes.

It will become the third in the 3264 Re series of cat bonds in 2025, having secured $150 million of US and Canadian cover in May through the 3264 Re 2025-2 cat bond and prior to that $200 million of worldwide peak peril retro through the 3264 Re 2025-1 issuance.

Find details of all Hannover Re’s directly sponsored catastrophe bonds in our extensive Deal Directory.

Now, we’re told the target size for this issuance has been increased, with both tranches of notes offered at a 25% increase in dollar terms, for a total offering size of $250 million.

At the same time, we understand that the pricing has been updated for each of the tranches, but within the initial guidance ranges, which might provide another data point suggesting cat bond investors are reaching their limits in terms of halting the recent decline in spreads, or just that discipline remains and not every offering is going to price below guidance still.

Recall that, this latest 3264 Re cat bond also features a bit of differentiated structuring as well, given the first tranche will provide annual aggregate industry loss cover for North American named storms and earthquakes, the second will provide two sections of coverage with one an industry-loss occurrence northeast US named storms cover and the other section an industry-loss annual aggregate cover for North American earthquakes.

Both tranches of Series 2025-3 notes issued by 3264 Re Ltd. will have three year terms, coming on risk from January 2026.

What was a $100 million Class A tranche of notes are now pitched at $125 million in size. These notes will provide annual aggregate named storm and earthquake cover across North America for the US and Canada on an industry loss trigger basis over a three year term and come with an initial expected loss of 3.63%

The Class A notes were initially offered to cat bond investors with price guidance for a spread of between 6.25% to 7%, but we’re told have been updated with guidance for a spread of 6.5%, so within the lower-half of the initial range.

What was a $100 million Class B tranche of notes are also now targeted to be $125 million in size. The Class B notes will provide two sections of cover, the first being Northeast US named storm cover on a per-occurrence basis, the second being annual aggregate North American earthquake risks (so US and Canada) and they come with a combined initial expected loss of 3.57%.

The Class B notes were first offered with price guidance for a risk interest spread of between 5.5% and 6.25%, but this has now been updated to 6%, so within the upper-half of the initial range.

As we’ve said before, the way pricing is moving during an offering of a cat bond can reflect investor demand or appetites for the asset class, specific deals and structures, but it can also be reflective of an offering that came to market initially with more realistic price guidance as well.

It’s encouraging to see Hannover Re now looking to sponsor the largest cat bond in its 3264 Re series of deals and at $250 million this would actually become the largest directly sponsored cat bond for Hannover Re ever.

Of course, the company has acted as ceding reinsurer in numerous far larger catastrophe bonds, as it provides its services as a front and conduit to the capital markets for clients in many cat bond deals as well.

You can read all about this new 3264 Re Ltd. (Series 2025-3) catastrophe bond from Hannover Re and every other cat bond issued in the Artemis Deal Directory.