Global reinsurance firm Hannover Re is back in the catastrophe bond market to source a slice of its own retrocessional coverage, with a $100 million or greater international multi-peril cat bond transaction.This transaction marks the first time Hannover Re has been a sole ceding company and beneficiary of the protection from a catastrophe bond for some years, in fact since the firms Eurus III Ltd.cat bond that was issued back in 2012.Hannover Re is a regular participant in catastrophe bonds, but in recent years this is more typically for its ceding clients, to help them access the capital market, or as a facilitator of its regular private cat bond issues.3264 Re Ltd.looks much more like Hannover Re returning to the cat bond market in search of its own retrocession, a clear sign of the attractive economics in ILS right now, as a number of larger players have returned to the cat bond in search of retro reinsurance top-ups.With the retrocession market in flux and lacking some capacity still, while pricing has risen considerably, it has made the index trigger cat bond look particularly favourable again, with very attractive pricing.

Hence the return of major reinsurance firms such as Hannover Re at this time.The transaction is being issued through newly registered Bermuda special purpose insurance vehicle 3264 Re Ltd.We understand from sources that the vehicle 3264 Re Ltd.will issue a single tranche of Series 2020-1 notes, currently sized at a $100 million issuance.These notes will be sold to investors, with the proceeds used to collateralise the underlying retrocessional reinsurance agreement between 3264 Re Ltd.and Hannover Re itself.The agreements will cover certain losses from multiple international perils, specifically U.S.

named storm risks, U.S.and Canadian earthquake risks and European windstorm risks.The cat bond will feature weighted industry loss triggers and coverage will be on an annual aggregate basis, with PCS supplying the industry loss data for named storm, hurricane and earthquake events, and PERILS for European windstorm events.The transaction will run for a three year term, providing Hannover Re with a source of international annual aggregate retrocession for its peak perils until the end of January 2023, we’re told.The single $100 million tranche of 3264 Re Ltd.Series 2020-1 Class A notes are said to have an initial attachment probability of 5.46%, an initial expected loss of 4.04% at the base case and are being offered to cat bond investors with coupon price guidance in a range from 10% to 10.75%.The multiple seems aligned with other recent retro cat bond deals, with plenty of room for investors to make their appetites known within the pricing guidance range.This transaction will be an interesting one to watch given Hannover Re’s expertise as cat bond facilitator and in ceding its risks to capital market investors using its K-Cession sidecar.As a result, the reinsurance company has clear visibility of market conditions and investor appetite, so it must be confident that cat bond market conditions are attractive to return as a sponsor right now, which could mean the deal upsizes if demand is found.It’s encouraging to see such big and well-respected catastrophe bond sponsors returning to the market and it bodes well for issuance levels through 2020 and beyond.You can read all about this from Hannover Re in our comprehensive and we’ll update you as any further information becomes available.———————————————————————Tickets are selling fast.