International reinsurer Hannover Re has seen continued success in its enterprise servicing and facilitating transactions within the collateralised reinsurance and insurance-linked securities (ILS) market within the first-half of 2024, with it notably beating its personal full-year document for disaster bond restrict fronted for already this 12 months.
Lately, Hannover Re has turn out to be some of the vital facilitators inside the world insurance-linked securities (ILS) market.
Its work sees the reinsurer serving to cedents with their disaster bond transactions, by fronting the capital markets, and in addition utilising its balance-sheet to assist different ILS fund managers and buyers entry reinsurance and retrocessional danger in collateralised kind.
Hannover Re’s place as a facilitator for the insurance-linked securities (ILS) market has continued to develop this 12 months, by its fronting and danger transformation actions for collateralised reinsurance and disaster bond transactions.
By partnering with devoted ILS fund managers and buyers, Hannover Re helps them to entry danger by its constructions, or their very own, with the additional benefit of its rated balance-sheet deployed to entrance transactions and in addition take in among the tail danger related to offers.
Hannover Re enjoys advantages from these fronting and danger transformation relationships by incremental earnings, when it comes to charges, by serving to fund managers and buyers entry danger.
Additionally, simply as vital, the reinsurer is ready to play a task as a bigger and extra vital companion to shoppers and cedents, serving to them entry sources of capital market reinsurance capability effectively, alongside the strong balance-sheet safety it gives.
Among the best measures of the expansion of this enterprise for Hannover Re is within the quantity of collateral furnished to belief accounts, to assist investor and ILS fund supervisor’s obligations to the reinsurance preparations.
For full-year 2023, Hannover Re reported EUR 5.112 billion of collateral that had been furnished by investors as safety for potential reinsurance obligations from ILS transactions for that 12 months.
That was a major enhance on the EUR 3.323 billion reported for a similar in full-year 2022.
Now, for the first-half of 2024, Hannover Re has reported that the quantity of collateral furnished by buyers as safety for potential reinsurance obligations from ILS transactions had risen to nearly EUR 6.96 billion on the mid-year stage.
Hannover Re has additionally seen continued success in fronting the capital markets for disaster bond sponsors in 2024, with various vital offers facilitated within the first-half and a brand new full-year document already set.
Amongst these are a $100m Montoya Re Ltd. (Series 2024-1) transaction, a $305m Integrity Re Ltd. (Series 2024-1) deal, a $575m FloodSmart Re Ltd. (Series 2024-1), the $450m Cape Lookout Re Ltd. (Series 2024-1) issuance, the large $1.4bn Alamo Re Ltd. (Series 2024-1) cat bond, the $145m Longleaf Pine Re Ltd. (Series 2024-1), a $100m Mayflower Re Ltd. (Series 2024-1) cat bond, and the $85m Puerto Rico Parametric Re Ltd. (Series 2024-1) disaster bond.
That’s already $3.16 billion of disaster bonds that Hannover Re had fronted the capital markets for within the first-half of 2024.
We imagine that’s a brand new document for the corporate, as for 2023 it had put the full-year determine at $2.8 billion in cat bonds positioned that it had performed a task in facilitating for shoppers.
So Hannover Re is benefiting from two market dynamics it appears, the expansion of the disaster bond market sees it fronting for an growing quantity of restrict in 144A disaster bond kind, whereas the continued restoration of the personal ILS market has seen its fronting for collateralised reinsurance broaden additional as properly.
All of this shall be driving growing charge revenue and revenues for Hannover Re, with the reinsurer presumably paid service charges for appearing as a entrance and facilitator for ILS and capital markets reinsurance offers.
It’s value additionally noting, that Hannover Re additionally facilitates personal disaster bonds below the Seaside Re and LI Re packages, all issued by its Kaith Re segregated accounts firm. So the reinsurer has further sources of ILS facilitation revenue as properly and that is probably an more and more significant supply of charges for the corporate.
