Munich Re takes Eden Re II reinsurance sidecar to $300m for 2018

by Artemis on January 5, 2018

Reinsurance giant Munich Re has sponsored a second issuance for 2018 from its latest collateralized reinsurance sidecar, with a $216.34 million tranche of Series 2018-1 Class B participating notes issued by its Eden Re II Ltd. sidecar vehicle, taking the total size of the 2018 issuance to $300 million.

Munich Re’s 2018 Eden Re II sidecar is therefore a little smaller than it was in 2017, when the reinsurer issued two tranches totaling $360 million. Munich’s Eden reinsurance sidecars were also around $360 million for the 2015 and 2016 underwriting year’s as well, so 2018 has seen it downsize this slightly.

For 2018 Munich Re has already placed an almost $83.7 million tranche of Series 2018-1 Class A participating notes from its Eden Re II Ltd. collateralised reinsurance sidecar vehicle with investors.

Now the company has followed up with a Class B tranche of notes, which is Munich Re’s eighth tranche from an Eden Re sidecar vehicle.

This latest issuance involved special purpose reinsurer Eden Re II Ltd. issuing almost roughly $216.34 million of Series 2018-1 Class B participating notes which have a due date of March 22nd 2022, acting on behalf of an Eden Re II Segregated Account 2018-1.

The notes have been placed with qualified investors and admitted to the Bermuda Stock Exchange (BSX) under listing classification Section V – Insurance Related Securities.

The Eden Re collateralized reinsurance sidecar vehicles remain a key component of Munich Re’s strategy to partner with capital markets and ILS investors, to source efficient retrocession, while sharing its risks and underwriting returns with investors.

Munich Re has been tapping the capital markets for retrocessional reinsurance protection and sharing the returns of its underwriting with institutional investors through collateralised vehicles named Eden Re since 2014, with the cumulative size of the transactions now amounting to cessions of roughly $1.72 billion of risk transferred over that time (all detailed in our Reinsurance Sidecar Directory).

Despite the shrinking of the Eden Re II arrangement in 2018 Munich Re has other arrangements in place with ILS investors which likely more than make up for this decrease in size of the sidecar, we understand.

It’s also notable that Munich Re has been commuting some of its reinsurance sidecar arrangements following the major catastrophe events of 2017, redeeming some tranches of notes early to provide finality to investors and so they can roll forwards more easily into new sidecar arrangements, such as the 2018 issuance.

In recent weeks Munich Re has redeemed two classes of notes from its $290 million Eden Re II Series 2015-1 collateralized reinsurance sidecar early, and redeemed a $75.578 million Class A tranche of the Eden Re II Series 2016-1 collateralized sidecar vehicle.

These early redemptions are thought to be a restructuring of the sidecars following the losses, as the vehicles have been eroded to a degree making their commutation and redemption an attractive option, with a fresh sidecar issuance (the 2018 transactions) in the works at the time.

For more details on reinsurance sidecar investments and transactions view our list of collateralized reinsurance sidecars.

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