Hannover Re hopes to upsize 3264 Re cat bond to as much as $140m

Hannover Re, the German global reinsurance company, is now aiming to upsize its latest retro catastrophe bond, lifting the target for the 3264 Re Ltd. (Series 2024-1) issuance to as much as $140 million, this publication has learned.

Hannover Re returned to the catastrophe bond market earlier this month, looking to secure $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.

For this third 3264 Re cat bond, Hannover Re is seeking retrocession for northeast US named storm and Gulf of Mexico named storm risks.

Both tranches of cat bond notes being offered by 3246 Re Ltd. 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.

At its launch to investors the $100 million target was evenly split across two tranches of notes, but we’re now told the target has moved and across the pair up to $140 million of catastrophe retrocessional reinsurance is now sought.

What was a $50 million Class A tranche of notes to provide northeast US named storm protection, are now targeted at between $70 million and $80 million, we understand.

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 we’re now told that price guidance has fallen to the lower-end and been fixed at 7%.

What was a $50 million Class B tranche of notes to provide named storm cover for Gulf Coast states, excluding Florida, are now sized at between $50 million and $60 million, we understand.

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%, but we’re now told that price has been fixed at the upper-end of guidance, for an 18% spread.

All of which again 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, we suspect.

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.