Munich Re transfers large natural catastrophe risks to the capital markets
Munich Re has acquired capital market capacity providing cover for natural catastrophe exposure in its book of reinsurance business through a sidecar transaction. The cover is provided by a worldwide institutional investor base through Eden Re II Ltd., a Bermuda-registered special purpose insurer. Eden Re II issued notes to investors with a volume of US$ 290m, with those proceeds serving as collateral to Munich Re’s cover.
Munich. The sidecar transaction transfers risks via a quota-share retrocession agreement with pro-rata sharing of risk and premiums. With this transaction, Munich Re transfers a share of its book of non-proportional covers for property cat treaties mainly exposed to natural catastrophe events to Eden Re II Ltd. Investors in the notes receive a corresponding share of premiums. In case of losses from this sub-portfolio, Munich Re obtains relief from the quota-share cover with Eden Re II Ltd. for the risk period that ends on 31 December 2015. With this risk transfer structure, investors follow Munich Re’s underwriting standards in full. Munich Re retains the majority of risk exposure from this book of business.
Board Member Thomas Blunck: “This sidecar transaction provides a basis to create synergies between large institutional investors’ interest in reinsurance risk and our core business of covering the Nat Cat risk of our clients. Both our clients and our capital markets partners are benefiting from our Nat Cat know-how and our competence to write and manage such peak risks.”
Through another transaction with Eden Re I Ltd., Munich Re renewed its Eden Re Ltd. transaction whose risk period matured on 31 December 2014, with a volume of US$ 75m providing coverage for losses during 2015.
Munich Re structured and arranged both transactions.
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 and exempted pursuant to 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, including an applicable exemption from registration requirements. 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.