Hannover Re secures upsized $140m target for 3264 Re cat bond

Hannover Re, the German global reinsurance company, has now successfully upsized its latest retro catastrophe bond, securing $140 million of retrocessional cover from the 3264 Re Ltd. (Series 2024-1) issuance.

Hannover Re came back to the catastrophe bond market earlier this month, initially targeting $100 million of named storm and hurricane retrocessional protection for parts of the United States.

This will be the third catastrophe bond the reinsurer has sponsored using this Bermuda special purpose insurance vehicle, 3264 Re Ltd.

You can see all of Hannover Re’s directly sponsored catastrophe bonds in our Deal Directory.

As we later reported, Hannover Re’s target was increased, with up to $140 million of catastrophe retrocessional reinsurance then being sought, while the reinsurer saw the prices move in different directions, the lower-risk tranche pricing down and the higher-risk pricing up.

Now, we’re told that upper-target size of $140 million of retro has been secured, while the notes have been priced at the updated spread levels we’d already reported.

For this third 3264 Re cat bond, Hannover Re has secured $140 million of retrocession for northeast US named storm and Gulf of Mexico named storm risks.

Both tranches of cat bond notes that 3246 Re Ltd. is selling will provide Hannover Re with per-occurrence retrocession on a weighted PCS industry-loss index trigger basis, over a three year term to the end of June 2027.

What was a $50 million Class A tranche of notes to provide northeast US named storm protection, were later targeted at between $70 million and $80 million, and we’re now told the upper-size of $80 million has been secured.

The Class A notes come with an initial base expected loss of 1.7% and were first offered to investors with price guidance in a range from 7% to 7.75%, but they have now been priced at the lower-end of 7%, we understand.

What was a $50 million Class B tranche of notes to provide named storm cover for Gulf Coast states, excluding Florida, were later sized at between $50 million and $60 million, and we’re now told are finalised to provide the upper-target of $60 million of retrocession for Hannover Re.

The Class B notes are much riskier, with an initial base expected loss of 4.78%, and were first offered to investors with price guidance in a range from 17% to 18%, and the price has now been finalised at the upper-end of guidance, for an 18% spread.

As we said before, this example shows cat bond investors expressing their appetites for risk and return, with different results in pricing for the two tranches, reflecting the differences in risk levels and regions covered by the notes.

You can read all about this new 3264 Re Ltd. (Series 2024-1) catastrophe bond from Hannover Re and every other cat bond issued in the Artemis Deal Directory.