Hannover Re secures an increased $200 million aggregate retrocession through the 3264 Re 2025 catastrophe bond

Hannover Re has successfully secured its increased target of $200 million in retrocession coverage for global peak perils on an annual aggregate basis through the newly issued 3264 Re Ltd. (Series 2025-1) catastrophe bond.

Initially targeting $175 million, Hannover Re returned to the catastrophe bond market earlier this month to launch the fourth installment in the 3264 Re series. In a subsequent update, it was reported that the target had been raised to $200 million, with price guidance adjusted for the two tranches of notes. By the end of last week, Hannover Re achieved its upsized goal, finalizing the pricing of the bond.

The 3264 Re 2025-1 cat bond will provide Hannover Re with multi-year annual aggregate retrocessional protection. The bond comprises two tranches of notes: one offering broad coverage across multiple perils globally, and the other focusing exclusively on remote North American earthquake risks.

The broad coverage tranche, which initially aimed to secure $75 million, was upsized to $100 million. It has an expected loss of 7.5% and priced at a risk interest spread of 21.25%, near the higher end of the initial guidance range (20.5%–21.5%). The second tranche, covering $100 million in North American earthquake risks, maintained its original size. With an expected loss of 0.92%, it was priced at a 3% risk interest spread, the lower end of its revised guidance range (3%–3.5%), down from the initial 3.5%–4%.

This bond provides Hannover Re with $200 million in retrocessional coverage over three annual risk periods, starting February 1, 2025, and ending January 31, 2028. The Class A notes offer protection for worldwide perils with event caps and franchise deductibles across multiple index levels. Meanwhile, the Class B notes exclusively cover North American earthquake risks, including Canada.

The pricing dynamics indicate that investors continue to demand higher returns for riskier, aggregate coverage tranches, while more remote and specialized risk tranches attract competitive pricing. With this issuance, the 3264 Re 2025-1 bond becomes Hannover Re’s largest cat bond to date in the 3264 Re series.

Details of this and other Hannover Re-sponsored catastrophe bonds can be found in the Artemis Deal Directory.