Global reinsurance giant Munich Re is returning to the catastrophe bond market to sponsor its first issuance since 2016, seeking $100 million or more in US named storm retrocession with a Queen Street 2023 Re dac transaction.
Munich Re has been sponsoring catastrophe bonds for over two decades and this will be the 22nd Artemis has tracked in the extensive cat bond Deal Directory.
For this new cat bond, Munich Re has established a new Ireland based designated activity company named Queen Street 2023 Re dac.
As we understand it, Queen Street 2023 Re dac will issue a single tranche of notes that will be sold to cat bond funds or investors and the proceeds used to collateralize a retrocessional reinsurance arrangement between it and the sponsor.
We’re told that this Queen Street 2023 Re catastrophe bond will provide Munich Re with a capital markets backed source of US named storm retro reinsurance protection, covering it for three wind seasons and with its maturity slated for the start of December 2025.
The retro protection from these notes will be afforded on a per-occurrence basis, structured to use a PCS state-weighted industry-loss trigger, we understand.
According to sources, the targeted issuance size is currently $100 million, although it’s likely this could grow if pricing is conducive.
The Queen Street 2023 Re dac notes will have an initial attachment probability of 2.26%, an initial base expected loss of 1.72% and are being offered to cat bond investors with price guidance in a range from 8% to 8.75%, it’s said.
The fact we see Munich Re return to the catastrophe bond market at this time is positive.
It suggests retro capacity can perhaps be as efficiently sourced in the capital market using cat bonds at this time, than traditional retro capacity sources, for certain well-structured industry-loss trigger deals from recognised sponsors at least.
You can read all about this new Queen Street 2023 Re dac catastrophe bond that is being sponsored by Munich Re, and view details of more than 900 other cat bond issuances, in the extensive Artemis Deal Directory.
Register today for ILS Asia 2023, our next insurance-linked securities (ILS) market conference. Held in Singapore, July 13th, 2023.
Get a ticket soon to ensure you can attend. Secure your place at the event here!