Hannover Re renews Cumulus Re parametric cloud outage cat bond at larger $20m

Global reinsurance firm Hannover Re has successfully sponsored a renewal of its landmark parametric cloud outage catastrophe bond, securing $20 million in retrocessional cyber reinsurance protection covering cloud outage events from a new Cumulus Re (Series 2025-1) issuance, with the support of Parametrix.

Like the first Cumulus Re cloud outage cat bond, that Hannover Re sponsored in 2024, this renewal deal sees the risk being placed with investors on a private basis using the firm’s Kaith Re Ltd. vehicle, while modelling of the cloud-related cyber exposure has again been undertaken by specialist provider of digital business interruption risk analytics and solutions Parametrix.

A year ago, Hannover Re secured $13.75 million of protection from the first Cumulus Re (Series 2024-1) parametric cloud outage catastrophe bond.

That deal was the first ever cyber cat bond to have a purely cloud risk focus and was also the first and only cyber cat bond to utilise a parametric trigger.

So, it’s good to have learned in recent weeks that Hannover Re was back in the market and seeking to renew and upsize the Cumulus Re cat bond deal.

Now, with the transaction issuance settled, we can report that the company secured $20 million of protection from the renewal issuance of Cumulus Re Series 2025-1 notes by its Kaith Re vehicle, so over 45% larger than the maturing 2024 deal.

Kaith Re Ltd. has issued $20 million of Cumulus Re 2025-1 notes which have been privately placed with cat bond investors, so fit within the cat bond lite segment of the market.

The first Cumulus Re cloud outage cat bond in 2024 featured Reg 4(a)(2) zero coupon notes and we suspect this 2025 issuance is likely to be the same.

As with the first transaction, this new Cumulus Re 2025-1 cloud outage catastrophe bond features a parametric trigger, which is based on the outages of major US cloud provider regions and designed by specialist risk analytics provider Parametrix.

Parametrix also acts as the ongoing calculation agent for the deal, monitoring for and reporting on the occurrence of cloud outage events.

The $20 million of Cumulus Re 2025-1 cat bond notes therefore provide Hannover Re with a single year of capital markets backed collateralized retrocessional cyber reinsurance protection against major cloud outages, using a parametric trigger.

The maturity date will be April 14th 2026, aligned with the previous and soon to mature deal.

Hannover Re will benefit from $20 million of retrocessional cover that will trigger if the delivery of specific cloud services, in certain U.S. cloud regions, by one or more named cloud service providers, are interrupted in excess of a specified waiting period, just like the first deal.

We’re told the waiting period, so effectively the attachment metric for these notes, will be for a 24 hour cloud outage event.

These parametric cloud outage private cat bonds provide a form of per-occurrence retrocessional protection, covering Hannover Re against impacts to its underwriting portfolio from significant cloud outage events, on a parametric trigger basis.

We’re also told that Hannover Re structured the coverage from this new cyber cat bond itself.

Parametrix commented that, “This second, larger cloud outage catastrophe bond attracted a greater number of investors to provide sponsor Hannover Re with $20 million worth of retrocessional protection for 2025-6 against the accumulation of losses caused by a sustained cloud-outage event,” also noting that, “Cumulus Re was not drawn down in its first year.”

The company added that the larger second Cumulus Re cat bond transaction shows that cloud monitoring and loss modeling by Parametrix “continues to build confidence in systemic cyber risk assessment.”

Parametrix has now tracked and audited more than 2,600 historical cloud outage events, collecting over 260 billion cloud performance and availability data points to create a dataset that “provides a global view into the performance and availability of the three largest public cloud service providers, Amazon Web Services, Microsoft Azure, and Google Cloud Platform.”

“We have shown again that portfolio accumulation of cloud outage losses is a risk that can be tamed,” explained Sharon Haran, Managing Director of Parametrix Analytics. “We are pleased to have worked with Hannover Re to get this second, larger bond over the line, and to have delivered a tool which gives bond buyers a real-time understanding of the digital performance they have covered.”

Henning Ludolphs, Managing Director, Retrocession & Capital Markets at Hannover Re, added, “It is satisfying to see a successful risk transfer experiment from 2024 transformed into a larger, routine transaction in 2025. I am grateful to Parametrix, whose expertise and technology have made possible this advance in 21st-century technology risk transfer.”

This Cumulus Re 2025-1 cyber catastrophe bond is now the eleventh cyber cat bond arrangement listed in our Deal Directory, but only the second to feature a parametric trigger, alongside the maturing 2024 issuance under the same name.

You can read all about this Cumulus Re (Series 2025-1) private cloud outage cyber catastrophe bond in our Deal Directory.