The recently completed $400 million Leo Re Ltd. 2018-1 collateralised reinsurance sidecar transaction, issued on behalf of one of the funds administered by Dutch pension fund manager PGGM, involves a private ILS transaction between PGGM and reinsurance giant Munich Re.
A PGGM spokesperson confirmed that the latest sidecar arrangement is another private ILS deal it has entered into with Munich Re.
The Leo Re transactions are akin to a privately negotiated slice of Munich Re’s own sidecar transaction, the Eden Re series of deals, with the risks and coverage involved similar.
The second and third issuances under the Leo Re vehicle, following a $200 million 2017 sidecar arrangement, the 2018 transaction saw PGGM upsizing on its backing of Munich Re underwritten risk, increasing the size of the vehicle to $400 million, with a $260 million Class A tranche and $140 million Class B tranche of notes.
The Leo Re sidecar reinsurance transactions are funded by Dutch pension fund manager PGGM on behalf of one of the pensions it administers, the Dutch healthcare and social welfare sector’s PFZW.
By working with Munich Re the pension fund can gain access to a private slice of the reinsurers portfolio. This could also have been accessed through the Eden Re sidecar issues from Munich Re, but by taking the deal private and using its own vehicle, PGGM can likely benefit from having more influence on the terms and scale of the transaction, rather than allocating to a co-mingled sidecar investment vehicle.
The notes issued through the Leo Re collateralized reinsurance transaction for 2018 even have the same maturity date as those issued by Eden Re in Munich Re’s 2018 sidecar transaction, suggesting that Leo Re simply features a slice of the same transaction, but privately negotiated and arranged for PGGM.
We understand that the Leo Re transaction a year ago was also a private arrangement with Munich Re.
For more details on reinsurance sidecar transactions and investments view our list of collateralized reinsurance sidecars.