Hannover Re expands its ILS activities

Germany’s Hannover Re said on July 12 that it completed three transactions as part of its insurance-linked securities (ILS) activities.

For the first time, Hannover Re has transferred storm and severe thunderstorm risks to capital market investors for the American Integrity Insurance Company of Florida (AIIC). The amount of capital raised from institutional investors is $210 million; the transaction matures in approximately three years.

In two further transactions, Hannover Re has transferred risks to capital market investors for the Texas Windstorm Insurance Association (TWIA) and Massachusetts Property Insurance Underwriting Association (MPIUA). The catastrophe bond volumes for TWIA and MPIUA amount to $400 million and $350 million respectively. These transactions also have a maturity of approximately three years.

"We are delighted that with our three latest transactions we have been able to not only maintain existing partnerships but also acquire a new client,” said Jürgen Gräber, the responsible member of the executive board. “In recent years we have substantially enlarged our market share of transformer business with the placement of additional exposures in excess of $2.5 billion."

GC Securities, a division of MMC Securities LLC, served as the sole structurer and sole bookrunner on each of these three transactions.

Through its ILS activities, Hannover Re is able to generate margins that are both low-risk and attractive, the company noted.

Hannover Re has placed the world's first risk securitisation in 1994. Along with the risk transfer for clients, it also protects Hannover Re’s own risks through the capital market. Furthermore, the company is itself active as an investor in catastrophe bonds.

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