Hannover Re raises Acorn Re parametric cat bond target size again, to $450m

Hannover Re has for a second time increased the target size of what will be the seventh catastrophe bond offering in the annual Acorn Re parametric US earthquake series of deals, now seeking $450 million of limit from the Acorn Re Ltd. (Series 2026-1) issuance, Artemis understands.

Hannover Re returned to market with this new and now seventh Acorn Re parametric catastrophe bond earlier this month, initially seeking $200 million of risk transfer and reinsurance limit for the single named ceding insurer, Oak Tree Assurance Ltd. while also sourcing additional protection to cover other reinsurance deals it has entered into.

As we reported in our first update on this new cat bond yesterday, the offering size was increased by 75% to seek $350 million of limit, while the price guidance was lowered.

Now, sources have told us the target size has been further increased, with $450 million of parametric earthquake reinsurance limit now being sought.

Acorn Re parametric earthquake cat bonds have now been issued four years in a row, as this deal becomes an increasingly regular and annual feature of this time of year. Read about all seven Acorn Re issuances in our catastrophe bond Deal Directory.

We won’t repeat all the details of the cat bond in our updates on size and pricing, so be sure to visit the Deal Directory entry for more background on the transaction.

So, Bermuda-based special purpose insurer (SPI) Acorn Re Ltd. is now offering a $450 million tranche of Series 2026-1 Class A cat bond notes to investors, the proceeds of which will collateralize a parametric reinsurance agreement to fund protection for the Kaiser Permanente captive, Oak Tree Assurance and also for certain exposures Hannover Re has written for its cedent clients.

The notes will provide per-occurrence based parametric reinsurance protection against earthquakes that strike the U.S. west coast region across a three year term, with the main focus of the parametric reinsurance protection being earthquakes in California, but the parametric trigger grid or box structure covers neighbouring states as well.

What was initially a $200 million tranche of Acorn Re 2026-1 Class A notes were first increased to $350 million, as we reported, but have now been increased again to $450 million in size terms.

The notes have an initial expected loss of 0.78% and were first offered to cat bond investors with price guidance for an initial risk interest spread of between 2% to 2.25%, which was lowered at the first update to between 2% and 2.15%, but this has now fallen again to a range of 1.9% to 2%, we’ve been told.

Cat bond price execution looks set to be strong this quarter, as the market has the appetite for more paper and fund managers also have ample cash on hand to deploy, which makes this a very good time for sponsors to bring new catastrophe bond deals to market.

You read all about this new Acorn Re Ltd. (Series 2026-1) transaction and every other catastrophe bond in the Artemis Deal Directory.