Stone Ridge supports Hannover Re in cyber risk transfer

Hannover Re has developed an additional retrocession tool that for the first time enables the capital markets to participate directly in coverage of its cyber risks through a quota share cession. Longstanding partner Stone Ridge is supporting the transfer with capital of USD100 million.

“For the first time, we were able to transfer cyber risks to the capital markets, and on a substantial scale, through a proportional reinsurance solution. This underscores our lead role as a bridge builder between the capital markets and the insurance industry,” said Silke Sehm, whose scope of responsibility as a member of Hannover Re’s Executive Board includes retrocession and insurance-linked securities (ILS). “We want to build on this initial success and further expand our cooperation with capital markets investors, extending also beyond our own retrocessions.”

In designing this transaction, Hannover Re was for the first time able to reconcile the complexity of a proportional cyber risk cession with the needs of a capital markets investor. The transaction covers cyber risks in Hannover Re’s worldwide portfolio and has a long-term orientation. It is another innovative step in Hannover Re’s own protection strategy outside the company’s traditional retrocession programme for catastrophe risks. Among other things, Hannover Re has brought an extreme mortality cover for the Life & Health reinsurance business group to the capital markets in regular tranches since as long ago as 2013.