Munich Re to acquire US weather risks specialist
Munich Re and reinsurer RenaissanceRe Holdings Ltd., Bermuda, have entered into a definitive agreement for the acquisition by Munich Re of RenaissanceRe’s weather and weather-related energy risk management unit, RenRe Energy Advisors Ltd. (“REAL”).
REAL’s team of experts have more than 16 years of experience in covering and trading weather risks, and REAL is one of the leading providers in this market segment. Its clientele mainly consists of energy companies in the USA and of other markets requiring coverage against fluctuations in income due to adverse weather conditions. The business also includes the trading of commodity contracts in oil and natural gas, with the aim of offering one-stop risk solutions. Munich Re has been working successfully with REAL for over three years as a risk capacity provider.
"With the acquisition of REAL, we are actively expanding our know-how and product range of weather risks and investing in a promising and profitable market. The new unit is an ideal complement to our expertise in the field of weather trends and weather risks, and also to our existing business model with solutions for weather risks", explained Thomas Blunck, the Munich Re Board member responsible for this segment. The new unit will enhance Munich Re's diversification in the field of weather derivatives, since it covers additional regions and sectors.
Fluctuating and difficult-to-predict weather conditions are significant economic risks for many business sectors. Munich Re has a particularly high level of expertise in assessing and modelling such risks. Its experts have monitored global weather trends and loss developments for nearly 40 years and devise risk solutions – for example, for utilities companies and other energy providers. Munich Re already offers solutions for weather risks. In conjunction with REAL, it will be able to cover not only traditional energy companies but also, to an increasing extent, investors in renewable energies – against lack of wind or sunshine, for instance.
The transaction is expected to close in the fourth quarter of 2013, and is subject to regulatory approvals and customary closing conditions.
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