Munich Re provides capital-markets solution for Zurich Financial – Lakeside catastrophe bond renewed
Munich Re has assisted Zurich Financial Services Group in a US$ 225m catastrophe bond transaction that transfers the risk of severe earthquakes in California to the capital markets. Munich Re acted as joint lead structuring agent in the transaction and helped placing the bond with institutional investors in the EU and Switzerland via its subsidiary Munich Re Capital Markets GmbH.
The bond with a 3-year period pays 7.75% interest plus the yield on the underlying money market funds. The bond, issued by Cayman-Islands registered Lakeside Re II Ltd., provides coverage for the Zurich Group against severe earthquake losses in California up to a maximum of US$ 225m. Replacing the expiring Lakeside Re Ltd. transaction issued in December 2006, the issuance was oversubscribed.
"We are pleased to have again been able to assist our client Zurich Financial Services Group with a capital markets transaction. Munich Re offers its clients the full spectrum of risk transfer solutions. Catastrophe bond spreads recently returned to normal so that the capital markets again constitute a good complementary risk carrier for peak risks like California earthquake", said Thomas Blunck, Munich Re Board member responsible for alternative risk transfer. "The transaction shows that investor confidence is returning."
Munich, 28 December 2009
Aktiengesellschaft in München
Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. In the financial year 2008, the Group – which pursues an integrated business model consisting of insurance and reinsurance – achieved a profit of €1.5bn on premium income of around €38bn. It operates in all lines of insurance, with around 44,000 employees throughout the world. With premium income of around €22bn from reinsurance alone, it is one of the world's leading reinsurers. Especially when clients seek solutions for complex risks, Munich Re is a much sought-after risk carrier. The primary insurance operations are mainly concentrated in the ERGO Insurance Group. With premium income of over €17bn, ERGO is one of the largest insurance groups in Europe and Germany. It is the market leader in Europe in health and legal expenses insurance. and 40 million clients in over 30 countries place their trust in the services and security it provides. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand. Munich Re's global investments amounting to €175bn are managed by MEAG, which also makes its competence available to private and institutional investors outside the Group.
DiThis press release is prepared for the purpose of public announcement of 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 in the United States 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.
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