Hannover Re seeks $100m US named storm retrocession with 3264 Re cat bond

Hannover Re, the German global reinsurance company, has returned to the catastrophe bond market to secure $100 million of named storm and hurricane retrocessional protection for parts of the United States, with a new 3264 Re Ltd. (Series 2024-1) issuance, we’ve learned.

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

In early 2020, Hannover Re sponsored a $150 million 3264 Re Ltd. (Series 2020-1) cat bond transaction that secured it multi-year retrocessional protection against aggregate losses from U.S. named storm risks, U.S. and Canadian earthquake risks and European windstorm risks, on an industry loss trigger basis.

The reinsurer then returned in 2022 and broadened the perils to effectively a worldwide deal, which was aggregate in nature and secured $100 million of retro with the 3264 Re Ltd. (Series 2022-1) issuance.

Now, the scope of coverage for this third 3264 Re cat bond is significantly narrower, being just northeast US named storm and Gulf of Mexico named storm risks.

Two $50 million tranches of notes are being offered, one to provide retrocessional protection for each named storm region and the notes will be sold to cat bond investors and the proceeds used to collateralize retrocessional reinsurance agreements between the SPI and Hannover Re.

Both tranches 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, we understand.

A $50 million Class A tranche of notes will provide the northeast US named storm protection, featuring the typical states for that region, and come with an initial attachment probability of 1.75%, an initial base expected loss of 1.7%, and are being offered to investors with price guidance in a range from 7% to 7.75%, we are told.

The second also $50 million Class B tranche of notes will provide named storm cover for Gulf Coast states, excluding Florida, and come with an initial attachment probability of 6.05%, so are much riskier, an initial base expected loss of 4.78%, and are being offered to investors with price guidance in a range from 17% to 18%, sources said.

Which should be a good test for investor appetite right as the hurricane season begins and it will be interesting to see how this new cat bond from Hannover Re prices in the coming weeks.

The fact Florida is not covered at all might assist in gaining more investor support, as so much of the recent US wind issuance has seen its exposure concentrated on that state.

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.