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Hannover Re Completes ILS Deals for Florida, Massachusetts, and Texas Catastrophe Risks

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July 14, 2017

Hannover Re recently completed three further catastrophe risk transactions in the field of alternative risk transfer. The deals, totaling $960 million, are part of its insurance-linked securities (ILS) activities.

For the first time, Hannover Re has transferred for the American Integrity Insurance Company of Florida a Florida-named storm and severe thunderstorm risks to capital market investors. The amount of capital raised from institutional investors is $210 million; the transaction matures in approximately 3 years.

In two further transactions, Hannover Re has again 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 3 years.

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

"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. In recent years we have substantially enlarged our market share of transformer business with the placement of additional exposures in excess of USD $2.5 billion," Jürgen Gräber, the responsible member of the executive board, noted. Through its ILS activities, Hannover Re is able to generate margins that are both low-risk and attractive.

Since the placement of the world's first risk securitization by Hannover Re in 1994, the company has utilized the entire spectrum of the ILS market. Along with the aforementioned risk transfer for clients, it also protects its own risks through the capital market. Furthermore, the company is itself active as an investor in catastrophe bonds.

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