Reinsurance giant Hannover Re has established a new Bermuda-domiciled Class C reinsurance vehicle named Kubera Insurance (SAC) Ltd., registering the vehicle in October 2018 before receiving a licence for it in December.
The Kubera vehicle appears to have been established specifically for Hannover Re’s U.S life reinsurance business to enter into large annuity or life transactions with clients, the first of which was with Fidelity & Guaranty Life (FGL).
Our research shows that FGL entered into a reinsurance agreement with a protected cell of Kubera on 28 December 2018 to cede certain multi-year guaranteed annuities.
According to the agreement, FGL cedes a 40%, 45%, and 63% quota share percentage of these annuity plans for issue years 2013, 2001 through 2012, and 2000 and prior, respectively.
FGL also entered into a reinsurance agreement with the cell of Kubera to cede approximately $4 billion of certain Fixed Indexed Annuities (FIA) statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance.
As per the agreement, FGL cedes an 80% and 90% quota share percentage of these annuity plans for issue years 2013 through 2014 and 2007 and prior, respectively.
FGL reports benefiting from $758 million of reinsurance recoverable from the Kubera protected cell at the end of 2018.
The assumption of this reinsurance portfolio, which is partially retroceded to Somerset Reinsurance Ltd. on a co-insurance funds withheld basis, is also supported against the peak exposure via a reinsurance deal with Hannover Re’s subsidiary Hannover Life Reassurance Company of America (Bermuda) Ltd.