Munich Re provides capital-markets solution for QBE Insurance Group Limited (QBE)

2014/01/10

Munich Re acted as joint lead structuring agent for a US$ 250m catastrophe bond transaction that transfers earthquake and cyclone risks in Australia and earthquake risks in USA to the capital markets.

Munich. QBE has acquired reinsurance protection of US$ 250m for earthquake and cyclone risks in Australia and earthquake risks in USA, with a combined statistical return period of around one event per 75 years, through a catastrophe bond issued by Bermuda-registered special purpose insurer VenTerra Re Ltd. (VenTerra), which has issued principal at-risk variable rate notes based on an indemnity, per-occurrence trigger with a three-year risk period, due 9 January 2017.

The catastrophe bond has a variable rate of interest based on the risk premium and yield paid from a US money market fund, which collateralises the catastrophe bond, investing in short-dated US treasury bills. The cat bond has received a rating of BB (sf) from Standard & Poor's, and the risk premium is 3.75% p.a. It was the first transaction under the newly established VenTerra Re program which provides QBE with flexibility to sponsor additional catastrophe bonds, should it choose to do so.

Jim Fiore, Chief Reinsurance Officer at QBE, said: “QBE is very pleased with the coverage and terms secured through the VenTerra program, which was the first catastrophe bond sponsored by our company, and by how well the bond offering was received among investors.”

Thomas Blunck, member of Munich Re’s Board of Management, said: “We are happy to have assisted our important client QBE with this catastrophe bond transaction as an additional tool for managing its risks besides tailor-made traditional reinsurance protection. This shows how Munich Re offers its clients the full spectrum of risk transfer solutions.”

Disclaimer
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.

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Disclaimer

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.

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