Munich Re has successfully sponsored and placed an almost $83.7 million tranche of Series 2018-1 participating notes from its Eden Re II Ltd. collateralised reinsurance sidecar vehicle with investors, as it sets up its retrocessional sidecar facility for the coming year.
Munich Re has been tapping the capital markets for retrocessional reinsurance protection and sharing its underwriting returns with investors through collateralised vehicles named Eden Re since 2014, which together amount to cessions of roughly $1.5 billion of risk transferred over that time (all detailed in our Sidecar Directory).
As we’ve recently detailed, Munich Re has been commuting some of its reinsurance sidecar arrangements following the major losses of 2017, redeeming the notes early to provide finality to investors and so any can roll forwards more easily into new sidecar arrangements, such as this.
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.
Both of these redemptions are assumed to be restructuring of the sidecars following losses, as the vehicles have been eroded to a degree making their commutation and redemption an attractive option, with a fresh sidecar issuance having reported to be on the horizon anyway (which we now see to be the case).
So this new $83.7 million tranche of Eden Re II Series 2018-1 notes is Munich Re’s seventh tranche from an Eden Re sidecar vehicle.
The first was a $63m Eden Re Ltd. sidecar for the January 2014 renewal, then a $290m Eden Re II Ltd. in time for the January 2015 underwriting year, followed by a slightly larger Eden Re Ltd. sidecar for 2015, a much larger $360m Eden Re II for the January 2016 reinsurance renewal and finally two issuances from Eden Re II totalling $360m for 2017.
This 2018 transaction saw a single tranche of participating notes issued and listed on the Bermuda Stock Exchange yesterday, with special purpose reinsurer Eden Re II Ltd. issuing almost $83.7 million of Series 2018-1 Class A participating notes that 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 BSX under listing classification Section V – Insurance Related Securities.
The Eden Re reinsurance sidecars are a core part of Munich Re’s strategy to partner with capital markets and ILS investors, to share its risks and underwriting returns and source of efficient retrocessional capacity.
The tranche is a little smaller than the Class A notes issued by Eden Re II for 2017, but Munich Re often returns with a larger Class B issuance in the New Year, so we may see that happen again in early 2018.
The Eden Re collateralised reinsurance sidecar series typically features institutional investors supporting Munich Re’s underwriting through specific retrocessional reinsurance portfolios, taking a quota share of the subject business from the reinsurer.
Read our previous articles on Munich Re’s Eden Re II Ltd. collateralised reinsurance sidecar.
For more details on reinsurance sidecar investments and transactions view our list of collateralized reinsurance sidecars.
Join us in New York in February 2018 for our next ILS conference