Hannover Re’s Kaith Re issues $59m in Seaside Re 2024 private cat bonds

The first private catastrophe bonds of 2024 have now come to light, as $59 million in Seaside Re private cat bond notes have been issued by Kaith Re Ltd., the transformer vehicle owned by global reinsurance firm Hannover Re.

In total, five separate private cat bonds from Seaside Re have come to light, the first we’ve listed in our Deal Directory for 2024.

Last year, for 2023, Artemis recorded $642 million of private catastrophe bond issuance.

Hannover Re has been helping market participants and its clients with the matching of reinsurance risks to capital markets and insurance-linked securities (ILS) investors in a more efficient manner for a number of years now and its Kaith Re structure has issued many of the private cat bonds we’ve tracked.

In 2023, Hannover Re facilitated the issuance of $49 million of notes across four Seaside Re private cat bond issues and one $15 million issuance under the LI Re account of Kaith Re.

Details of these can be seen in the Artemis Deal Directory, which you can filter to only show private cat bonds and cat bond lite transactions.

Hannover Re operates, in part, as a facilitator to help investors access reinsurance related risk and returns in securitized form, as well as helping its cedents to access the capital markets for complementary reinsurance capital.

The reinsurer does this by acting as a risk transformer and facilitator for 144A cat bonds, private catastrophe bonds and other collateralised reinsurance related insurance-linked securities (ILS). Hannover Re also cedes risk through its retrocession program, some of which may be securitized using Kaith Re.

Hannover Re uses Bermuda domiciled Class 3 insurer and reinsurance transformer vehicle Kaith Re Ltd. to issue its private cat bonds, and for 2024 these first five to come to light have all emerged from the vehicle, issuing on behalf of its Seaside Re segregated account.

Totalling $59 million, the first five Seaside Re private cat bonds of 2024 are:

In each case, with these private cat bond deals, the proceeds made from the sale of each tranche of privately placed notes to cat bond investors will fund the collateral requirements to support an underlying reinsurance or retrocession agreement, for whichever ceding re/insurer is the ultimate beneficiary of the protection.

This can, in some cases, be Hannover Re, which can utilise the Seaside Re program to enable investors to access its retro program in a securitized, cat bond like manner. Or it can appear to be the reinsurer, as it passes risk through from its ceding clients to the capital markets using transformed private cat bond notes.

Hannover Re can leverage these private cat bonds as a way to augment the coverage it provides to ceding clients, to supply larger, more diversified capacity limits using capital market investor appetite, helping to intermediate its clients access to the ILS and capital markets, so the reinsurer can play an even more important role in their renewals.

All five of of these Series 2024 notes issued by Kaith Re on behalf of its segregated account Seaside Re are exposed to U.S. property catastrophe risks, and have a due date of January 15th 2025.

These cat bond lite deals are sometimes representative of an investor or ILS fund participating in a reinsurance or retrocession tower, such as a one-year collateralized reinsurance or industry loss warranty (ILW) transaction entered into around the January 2024 renewals, or another private arrangement that has now been transformed to be matched with capital market investor appetite.

Hannover Re’s Seaside Re private catastrophe bond program provides ILS investors with a mechanism to access certain U.S. property catastrophe reinsurance risks in cat bond lite securitized form, providing the potential for secondary transferability and  liquidity, as well as the ability to meet certain of their investor and fund mandates.

As with the majority of the private ILS and cat bond lite deals we analyse and track, the full details of the transaction and underlying reinsurance or retrocessional coverage they provide are not available to us.

It’s also worth highlighting that, as we reported this week, there are a range of Seaside Re private cat bonds with their maturity dates currently extended, now totalling $139 million of issuances from prior years.

Track different types of catastrophe bond issuance using our chart that breaks down the market by 144A property cat bonds, private cat bond lites, cat bonds covering other classes of business, and mortgage ILS deals.

You can read all about these new Seaside Re 2024 private catastrophe bonds in our extensive Deal Directory and we’ll update you should any more come to light.