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Hannover Re - L3 Life Reinsurance Securitization

Transaction Summary

RISConsulting advised Hannover Re in the structuring and placing of a third multi-year risk transfer transaction involving life reinsurance business in a number of designated emerging markets.

Designated "L3", the facility was concluded for a period of three years and comprises a financing volume of EURO 50 million. It encompasses all classes of life, health and personal accident reinsurance and is specially designed to meet the needs of insurance companies in Asian emerging markets.

As with the previous L1 and L2 transactions, the need for L3 was also due to the fact that under German accounting rules acquisition costs from life and health reinsurance business have to be written off immediately in the year in which they are incurred, imposing a heavy burden on the profit and loss account of Hannover Re.

The Result

By transferring such costs to the capital markets, Hannover Re is able to ensure the necessary capacity to continue to expand its strategic priority segment of life and health reinsurance at the accustomed rate of growth. The transaction closed in November of 2000.
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