$60.5m of Hannover Re’s Seaside Re private cat bonds mature, $78.25m extended again

Some $60.5 million of the Seaside Re private catastrophe bond transactions facilitated by global reinsurance firm Hannover Re have now been allowed to mature, reducing the amount outstanding with their maturity dates extended to $78.25 million and those remaining have had their maturity dates pushed further out to October.

There have been repeated extensions of maturity dates for many of the Seaside Re private catastrophe bond transactions issued prior to this year.

All of these private cat bonds had been issued by German reinsurance firm Hannover Re’s transformer and segregated accounts vehicle based in Bermuda, Kaith Re Ltd.

When we last reported on the situation, there were numerous Seaside Re private cat bonds with vintages from 2020, 2021 and 2022 still with extended maturity dates, while in addition all of the 2023 vintage Seaside Re notes were added to the list.

At that time, the total risk capital extended in Seaside Re private cat bonds amounted to approximately $139 million.

But now a number have been allowed to mature, as clarity over potential losses has been reached, we assume.

Among those matured are the last remaining 2020 vintage issuance from Seaside Re, as well as one issuance from 2021 and all of those issued in 2023 that had most recently seen their maturity dates extended.

After this, the following Seaside Re cat bonds remain with extended maturity dates, now all further pushed out to October 15th 2024 and totalling $78.25 million:

As we always state, it is assumed that the extended Seaside Re deals are being retained to allow for further development of any catastrophe loss events that might have been covered by them, with further clarity over potential losses required before their capital can be returned to investors, or any realised losses be paid should payouts come due.

But encouragingly for the investors or ILS funds backing some of these extended deals, $60.5 million have recently been allowed to mature:

Those invested will be pleased to see the finality achieved across these $60.5 million of Seaside Re private cat bonds, as extensions of maturity deliver uncertainty and sometimes clarity is better than uncertainty, even when losses end up needing to be paid.

With the 2023 vintage Seaside Re deals, we assumed that as there were no significant peak peril loss events last year, it suggested these could have been exposed to aggregated severe weather losses.

With the Series 2022 private cat bond tranches from Hannover Re’s Seaside Re program, we assumed that they were likely all at-risk of potential losses related to hurricane Ian, given that was the most significant catastrophe loss event of that year. With three tranches still extended, it’s possible development continues here.

For the remaining 2020 and 2021 vintage Seaside Re private cat bonds, these were assumed to be exposed to catastrophe losses from their respective years of issuance, given almost every Seaside Re cat bond has provided its reinsurance or retro coverage across a single year risk period at most. Still three 2021 cat bond tranches remain extended, but the final 2020 vintage deal has now been allowed to mature.

Hannover Re is one of the most important facilitators in the catastrophe bond market, helping investors access reinsurance related returns in securitized form, and ceding clients to access the capital markets.

The reinsurance company acts as a risk transformer and facilitator for 144A cat bonds, private catastrophe bonds and other insurance-linked securities (ILS).

Hannover Re’s vehicle Kaith Re last issued series of Seaside Re private catastrophe bonds at the start of this year, with $59 million of Series 2024 notes coming to market.

According to Artemis’ extensive data on the catastrophe bond market, private cat bond issuance stands at over $283 million in 2024 so far.

Details of every private catastrophe bond we’ve tracked can be found in our Deal Directory, which you can filter by type of transaction making it easier to view only private cat bond issuances.

View our chart that breaks down issuance of catastrophe bonds by year and type, so you can analyse private cat bond issuance by year.