Hannover Re has given the capital market another opportunity to participate in (natural) catastrophe risks. The “K6” transaction, which was launched in 2009, was further boosted by the maximum targeted amount of USD 152 million to a total volume of USD 329 million; it was taken up by new and existing investors alike. Placement proved highly successful for Hannover Re, with investor demand comfortably outstripping supply. This also confirms that the market for alternative risk transfer, which had contracted in the wake of the financial market crisis, has recovered.
“Our latest capital market transaction serves to complement our traditional programme of protection cover, which we use to protect against peak exposures such as natural catastrophes”, Chief Executive Officer Ulrich Wallin explained. “Our investors enjoy extremely attractive returns given a normal experience of the covered portfolio. What is more, they are able to diversify their own portfolio and exclude the usual interest rate risks associated with other capital market products.”
The additional interests in the “K6” transaction were taken out in the form of three-year contracts, which means that in future only part of the “K6” quota share will be renewed at year-end. The transaction was placed with institutional investors worldwide.
The portfolio assembled for the “K6” securitisation consists of non-proportional reinsurance treaties in the property catastrophe, aviation and marine (including offshore) lines.