VKB lifts target to €200m for King Max Re German multi-peril cat bond renewal

German domestic market insurance group VKB is now aiming to upsize its latest catastrophe bond deal, raising the target size to secure a slightly larger €200 million of German multi-peril reinsurance protection from the King Max Re II DAC (Series 2026-1) issuance, this publication has learned.

Versicherungskammer Bayern Versicherungsanstalt des oeffentlichen Rechts’ (VKB) made its return to the catastrophe bond market in October to sponsor its second cat bond deal.

As we’ve explained before, this transaction is a renewal of sorts for the company’s soon to mature debut cat bond, the €175 million King Max Re DAC 2023, which is scheduled to mature in early January 2027.

Initially VKB was looking to secure €175 million of multi-peril reinsurance with this King Max Re II Series 2026-1 deal, which would fully replace the expiring cat bond protection.

In our first update on this transaction, we learned that VKB was aiming to secure its latest catastrophe bond deal at reduced pricing as the spread guidance for the notes on offer for this issuance was reduced.

Now, we’ve been told that VKB is looking to secure more German multi-peril reinsurance protection from investors, with the target for this King Max Re II DAC (Series 2026-1) deal now raised to €200 million.

King Max Re II DAC is now offering a single €200 million tranche of King Max Re II Series 2026-1 Class A notes to cat bond investors, which are designed to provide sponsoring reinsurer VKB Re with indemnity and per-occurrence triggered reinsurance protection against losses from a range of perils, including earthquake, hailstorm, flood and windstorm in Germany, running across a three year term beginning January 1st 2027.

The now €200 million King Max Re II Series 2026-1 Class A cat bond notes come with an initial expected loss of 1.68%.

Initially, these notes were first offered to cat bond investors with price guidance for a spread of between 3% and 3.25%, which was later revised to a lower spread of between 2.5% and 3%.

We’ve now been told the price guidance has for these notes has been updated again to a 2.75% spread, so at the middle of the revised range.

It appears that VKB looks set to become another sponsor that benefits from the strong investor appetite being seen in the cat bond market, with the company likely to secure more protection than it originally was targeting, with pricing appearing on track to settle below the initial guidance.

As a reminder, you can read all about this King Max Re II DAC (Series 2026-1) catastrophe bond transaction in our extensive Deal Directory, where you can analyse details of almost every cat bond ever issued.