Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

The Hanover lifts Commonwealth Re cat bond target to $150m


The Hanover Insurance Group, Inc. is already looking to upsize its first ever catastrophe bond, with the Commonwealth Re Ltd. (Series 2022-1) US named storm issuance now targeting $150 million of reinsurance protection for the US primary insurer.

hanover-insurance-group-logoThe Hanover entered the catastrophe bond market as a first-time sponsor just a week ago, as it looked to add multi-year capital markets funding to its catastrophe reinsurance arrangements.

The latest in a string of first-time cat bond sponsors in 2022, it’s encouraging to learn that The Hanover if already seeking to upsize its first cat bond sponsorship, which implies the experience it has had with cat bond funds and investors has been a positive one.

So, we now understand that Commonwealth Re Ltd. will aim to issue $150 million of Series 2022-1 notes to collateralize a reinsurance agreement between the vehicle and The Hanover.

This $150 million of reinsurance will protect The Hanover Insurance Group’s subsidiary insurers against certain losses from named storms (so tropical storms and hurricanes, as well as related perils) on a per-occurrence and indemnity trigger basis over a three year period, across northeast US states.

The Class A notes reinsurance coverage can attach at $1.3 billion of losses to The Hanover and its subsidiaries, exhausting at $1.45 billion, hence the upsizing attempt as this would now see the Commonwealth Re cat bond fill this layer of reinsurance for the sponsor.

The now $150 million of Series 2022-1 Class A notes come with an initial expected loss of 0.54% at the base case and were first offered to cat bond investors with price guidance in a range from 3.5% to 4%.

We’re now told that guidance has tightened to between 3.25% and 3.75%, implying a strong result for the carrier, as most catastrophe bonds are still pricing at or above the top of their initial price guidance.

You can read all about this Commonwealth Re Ltd. (Series 2022-1) catastrophe bond from The Hanover and every cat bond transaction ever issued in the extensive Artemis Deal Directory.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.