Swiss Re Insurance-Linked Fund Management

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Munich Re’s new Queen Street cat bond could become its biggest ever


Munich Re has again lifted the target size for its new catastrophe bond, with the reinsurer now seeking up to $300 million of US named storm retrocessional reinsurance protection from the Queen Street 2023 Re dac transaction.

munich-re-wall-signMunich Re returned to the catastrophe bond market in April, looking to sponsor its first Queen Street cat bond issuance since 2016.

Munich Re has been a sponsor of catastrophe bonds for more than two decades, with this new issuance becoming the 22nd issuance sponsored by the reinsurance that Artemis has tracked in the extensive cat bond Deal Directory.

This new 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, on an industry-loss trigger basis.

Initially, Munich Re had a target size for the issuance of just $100 million for this Queen Street 2023 Re cat bond, but as we then reported earlier this week, the targeted issuance size had been doubled to $200 million of protection for Munich Re.

At the same time the pricing guidance fell, as market conditions continue to provide strong execution for cat bond sponsors.

We’re now told by sources that Munich Re has lifted the target size further, with between $200 million and as much as $300 million of retro coverage now sought from this cat bond.

Should this Queen Street 2023 Re catastrophe bond grow towards the upper-end of that target, this could be the largest cat bond sponsored by Munich Re ever, or at least since the very first Queen Street cat bond from 2008 that was $258 million in size.

Even at the $200 million size, so now the lower-end of the target for Munich Re, this would become the second largest cat bond the reinsurer has sponsored and that we’ve recorded in our Deal Directory.

While electing to increase the target size for this Queen Street 2023 Re cat bond, the price guidance has been lowered again, we understand.

Initially, these Queen Street 2023 Re cat bond notes, which come with an initial base expected loss of 1.72%, were offered to cat bond investors with price guidance in a range from 8% to 8.75%.

That price guidance was reduced to 8%, so the low-end of guidance, earlier this week. But we’re now told this has been reduced again, with the latest price guidance being for a spread of between 7.5% and 8%.

Which would be a strong result for Munich Re and demonstrate the reinsurers’ appetite to continue leveraging the capital markets for retrocession, when market conditions are conducive.

With traditional retrocession capacity still seen as more limited in availability, the cat bond market has become a source of capacity major reinsurers are able to tap into and Munich Re is just one example of this in 2023.

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.

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