Global reinsurance company Munich Re is set to secure $360 million of third-party capital market investor support for the renewal of its Eden Re II Ltd. fully-collateralized reinsurance sidecar, Artemis understands.
As we wrote first in November, Munich Re has been back in the market for a 2016 renewal for the Eden Re II sidecar, offering investors both a 144a format tranche of notes as well as a Section 4(a)(2) offering as well.
At the time we understood that Munich Re was seeking somewhere in the region of $360 million to $430 million of third-party capital retrocessional reinsurance support through the Eden Re II Series 2016-1 issue.
Now, we’re told, the final total for the 2016-1 Eden Re II issue will be $360 million, with investors taking $75.578 million of the Class A Rule 144a notes and $284.422 million of the Section 4(a)(2) notes.
The 144a Class A notes were syndicated to the ILS investor community, we understand, while the Section 4(a)(2) notes were offered as part of a private placement to the investors in the 2015 sidecar.
The Eden Re II 2016 sidecar covers two retrocessional reinsurance portfolios for Munich Re, with the Class A notes taking a 5.25% share of the first and a 1.9% share of the second, while the Class B notes take a 19.75% share of the first and a 7.1% share of the second. In total that reflects Munich Re having secured 25% of its first retrocessional reinsurance layer through the Eden Re II sidecar with the Class A notes and 9% of the second.
We understand that the Eden Re II Series 2016-1 sidecar transaction closes today and the Class A and B notes are likely to list on the Bermuda Stock Exchange (BSX) in the coming days.
For 2015, Munich Re had $365 million of sidecar delivered retrocessional reinsurance capacity available, with $75 million through Eden Re I Ltd. and $290 million through Eden Re II Ltd. So for 2016 the total secured has dropped slightly, unless an Eden Re I 2016 sidecar comes to light, to $360 million and solely through Eden Re II.
Munich Re has shown its appetite to continue working with the capital markets with this the largest single capitalisation since it began using the Eden Re collateralized reinsurance sidecar series. Of course Munich Re is also set to secure another $100 million of capital markets retrocession thanks to its Queen Street XI Re catastrophe bond, which is expected to complete today.
Deutsche Bank Securities worked on this reinsurance sidecar capital raise for Munich Re.
For more details on reinsurance sidecar investments and transactions view our list of collateralized reinsurance sidecars.