Munich Re transfers US hurricane and Australian cyclone risks to the capital markets

2015/03/31

Using the reinsurance vehicle Queen Street X Re Limited, Munich Re has returned to the capital markets to acquire coverage for US hurricane and Australian cyclone risks with a total volume of US$ 100m. This was the ninth issuance of a catastrophe bond in the Queen Street series since 2011.

Munich. The transaction is comparable to previous Queen Street transactions. The notes – which will mature on 8 June 2018 – have been issued by Queen Street X Re Limited, a special purpose reinsurer registered in Ireland. The risk modelling was developed by AIR Worldwide. With this transaction, Munich Re obtains relief for losses from extreme events with a statistical return period of between 65 and 100 years per event. Loss events will be quantified on the basis of weighted market losses differentiated by region and line-of-business as determined by PCS (Property Claim Services) with respect to US hurricanes, and on the basis of modelled losses calculated by AIR Worldwide in respect of Australian cyclones.

The bond has a variable rate of interest based on the risk premium and yield paid from a US money market fund collateralising the catastrophe bond. The cat bond investors will receive a risk premium of 5.75% per annum. The notes have been placed globally among a broadly diversified group of international investors.

Board member Thomas Blunck said: “We have once again used a catastrophe bond to efficiently cover our single peak exposures such as US hurricane and Australian cyclone. The current market environment allowed for attractive risk spreads for investors, which at the same time made the risk transfer valuable for us. The bond has been well received by the market.”

Deutsche Bank Securities acted as sole bookrunner in this transaction, while Munich Re acted as sole structurer and arranger.

Disclaimer
This company news 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 company news 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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