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Private LI Re 2016-2 cat bond, from Hannover Re vehicle, matured early


A $10 million LI Re (Series 2016-2) private catastrophe bond that was issued by German reinsurance firm Hannover Re’s segregated accounts vehicle Kaith Re Ltd., has been matured early and its notes have been delisted as a result.

The $10 million of LI Re (Series 2016-2) notes were issued by Kaith Re Ltd., acting on behalf of a segregated account named LI Re, with the notes due for maturity on April 10th 2018.

But the notes have been matured early and de-listed from the Bermuda Stock Exchange (BSX) as a result, possibly due to impacts from the 2017 catastrophe events, although we cannot be sure.

A number of privately issued and placed cat bonds (or cat bond lites) have been affected by the hurricanes and other catastrophe events of 2017, resulting in some extensions of maturity while losses are calculated.

As ever though, given the private nature of these insurance-linked security (ILS) deals, details on what exactly has happened are scant.

It’s possible that the LI Re 2016-2 notes have just been matured as the beneficiary or investor behind them no longer requires the coverage.

But perhaps, after the 2017 catastrophes, a more likely explanation is that either a payout has been made, following losses, or one is set to be made.

We will likely never know whether the collateralized reinsurance or retrocession underpinning the LI Re 2016-2 paid out or not, but it is rare for a private cat bond to be matured early, unless there is a reason it has become less viable to maintain or losses have been suffered.

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