Munich Re provides capital-markets solution for TCIP
Munich Re acted as lead structurer for the Turkish Catastrophe Insurance Pool (TCIP) with a US$400m catastrophe bond transaction that transfers earthquake risks in Turkey to the capital markets.
Munich. TCIP has acquired reinsurance protection of US$400m for earthquake risks in Turkey with a statistical return period of around one event per 100 years. The protection is provided by Bermuda-registered special purpose insurer Bosphorus 1 Re Ltd., which has issued principal at-risk variable rate notes with a three-year risk period, due 3 May 2016.
The bond has a variable rate of interest based on the risk premium and yield paid from a fund, which collateralises the catastrophe bond. This fund investing in short-dated US treasury bills has been established for the cat bond by Munich Re’s asset manager MEAG. The cat bond has received a rating of BB+ (sf) from Standard & Poor's, and the risk premium is 2.50% p.a. It was the second transaction facilitated by Munich Re on behalf of TCIP after the Ianus cat bond transaction in 2009.
Süha Cele, Executive Vice President responsible for the reinsurance affairs of TCIP said: “We are happy that Bosphorus was well received by the capital markets. Bosphorus is a real success story for TCIP.” Ismet Güngör, Coordinator of TCIP at Eureko Sigorta, said: “In view of the constantly growing portfolio of TCIP we see the capital markets as a complement to our traditional reinsurance coverage. Bosphorus proved the availability of Turkish earthquake capacity in the capital markets. As our cat bond program is now well established, we are looking forward to approaching the capital markets as a diversification of our reinsurance channels in the future.”
“We are pleased to have again assisted our client TCIP with a capital markets transaction as an additional tool for managing its risks. This transaction is a further demonstration of how Munich Re offers its clients the full spectrum of risk transfer solutions”, said Georg Daschner, the member of Munich Re’s Board of Management responsible for Europe and Latin America.
This press release is prepared for the purpose of public announcement of the insurance solution provided by Munich Re in connection with the issuance of the bonds referred to herein (the "Bonds") and does not constitute or form part of any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any securities in any jurisdiction, nor shall it (or any part of it) or the fact of its distribution form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment therefore.
All of the Bonds have been sold and this announcement is a matter of record only. The Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or any state or foreign securities law and the issuer is not and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act").
The Bonds were offered and sold only to investors who are qualified institutional buyers in accordance with Rule 144A under the Securities Act and who, in the case of U.S. persons (as the term is defined in Regulation S under the Securities Act), are also qualified purchasers for purposes of Section 3(c)(7) of the Investment Company Act and may not be re-offered or re-sold except in compliance with all applicable transfer restrictions. Any purported transfer in violation of those restrictions will be null and void. In addition, the Bonds may be held only in certain permitted jurisdictions.
This press release contains forward-looking statements that are based on current assumptions and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance of Munich Re. Munich Re assumes no liability to update these forward-looking statements or to conform them to future events or developments.