By Michael Loney

March 26 - (The Insurer) - Hannover Re has sponsored a $20 million Cumulus Re II cloud outage catastrophe bond with modeling by Parametrix, which follows the German reinsurer’s first $13.75 million placement last year.

The cat bond provides Hannover Re with retrocessional protection for 2025 and 2026 against the accumulation of losses caused by a sustained cloud-outage event.

Parametrix said that the 45% larger cloud outage catastrophe bond attracted a greater number of investors than last year’s issuance.

Cumulus Re, which was launched in April 2024, was not drawn down in its first year.

To structure and price Cumulus Re, Parametrix leveraged its dataset to model Hannover Re’s underlying risk portfolio. Dedicated analytics arm Parametrix Analytics serves as the calculation agent for the bond.

Bondholders will be able to access a dedicated dashboard providing a real-time view of the status of relevant cloud regions, which Parametrix said enhances visibility and confidence in the performance of this emerging risk.

“We have shown again that portfolio accumulation of cloud outage losses is a risk that can be tamed,” said Sharon Haran, managing director of Parametrix Analytics.

Henning Ludolphs, managing director, retrocession and capital markets at Hannover Re, added: “It is satisfying to see a successful risk transfer initiative from 2024 transformed into a larger, routine transaction in 2025.”

The placement underlines the potential for the nascent cyber ILS market. The outstanding size of the 144A cyber cat bond market had grown to nearly $800 million at year-end 2024.

However, rating agencies AM Best and S&P Global Ratings both this month warned that the lack of standardization in policies may hinder development of the market.