Swiss Re Insurance-Linked Fund Management

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$75m Eden Re I reinsurance sidecar launches, likely Munich Re


It looks like the world’s largest reinsurance firm Munich Re has added another fully-collateralized reinsurance sidecar vehicle to its roster, as $75m of participating notes from a special purpose insurer named Eden Re I Ltd. have just listed in Bermuda.

Only last week a $290m Eden Re II Ltd. vehicle listed in Bermuda, which we assumed and sources confirmed to be a new sidecar type vehicle from Munich Re. It now looks like the reinsurer has launched another sidecar, as it continues to grow its use of alternative capital and leverage its relationships with capital market investors.

Munich Re launched its Eden Re Ltd. sidecar, a $63m collateralized vehicle that provided it with collateralized capacity to support its property catastrophe business a year ago. The launch of Eden Re II Ltd. last week, adding $290m of third-party capital and now another $75m with Eden Re I Ltd. confirm the reinsurers intention to make more use of alternative capital.

$75m of Series 2015-1 Segregated Account Participating Notes, due 19 April 2018, have been issued by Eden Re I Ltd. a Bermuda special purpose insurance vehicle. The $75m of notes have been admitted for listing on the Bermuda Stock Exchange (BSX) today, under the BSX’s Section V Insurance Related Securities classification.

Eden Re I Ltd. is being registered as a segregated accounts company as well as special purpose insurer, hence the issuance of segregated account participating notes. This likely makes the vehicle more suitable for deals involving single large investors, where as the Eden Re II vehicle may be more of a multi-investor vehicle as the notes it issued were not for a segregated account.

We understand that the Series 2015-1 participating notes issued by Eden Re I Ltd. are exposed to a wide range of perils that includes; earthquake, seaquake, earthquake shock, seismic and/or volcanic disturbance or eruption, hurricane, rainstorm, storm, tempest, tornado, cyclone, typhoon, tidal wave, tsunami, flood, hail, winter weather or freeze, ice storm, weight of snow, avalanche, meteor or asteroid impact, landslip, landslide, mudslide, bush fire, forest fire, lightning and fire and/or explosion following.

The contract underlying the segregated account deal constitutes a retrocession agreement for Munich Re, we understand. With the broad range of perils included it suggests that this is a slice across the reinsurers property catastrophe book.

No further details are available on the transaction, but as the notes are termed participating, rather than principle at risk, it seems safe to assume that this is another sidecar type collateralized reinsurance vehicle from Munich Re.

Effectively these deals allow Munich Re to access third-party capital to support its underwriting and retrocede a share of business to the investors. They play a similar role to a catastrophe bond, or private ILS deal, but allow for a full quota-share of the reinsurers portfolio to be offered to ILS investors if it chooses.

We will update you should any confirmation or further information come from Munich Re regarding this new Eden I Re Ltd. vehicle or the Eden Re II Ltd. launch a week ago.

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

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