German domestic market insurance group VKB is now aiming to secure its first renewal of a catastrophe bond at reduced pricing, with the price guidance now lowered for the still €175 million King Max Re II DAC (Series 2026-1) German multi-peril transaction, we understand from sources.
Versicherungskammer Bayern Versicherungsanstalt des oeffentlichen Rechts’ (VKB) returned to the catastrophe bond market for its second sponsorship in October, with the transaction a renewal of sorts for its soon to mature debut issuance.
The company had sponsored its debut cat bond in late 2023, securing €175 million of multi-peril catastrophe reinsurance protection from the King Max Re DAC 2023 issuance, which is scheduled to mature in early January 2027.
This renewal transaction comes with a lower attachment point than the maturing cat bond, showing VKB looking to bring the protection further down within its reinsurance tower.
The initial size target for this of King Max Re II Series 2026-1 Class A notes has not changed, being still for €175 million of reinsurance, so to fully replace the expiring cat bond protection.
The €175 million of King Max Re II Series 2026-1 Class A notes are designed to provide sponsoring reinsurer VKB Re with indemnity and per-occurrence triggered reinsurance protection against losses from the perils of earthquake, hailstorm, flood and windstorm in Germany, over a three year term beginning January 1st 2027.
These King Max Re II Series 2026-1 Class A cat bond notes come with an initial expected loss of 1.68% and were first offered to investors with price guidance for a spread of between 3% and 3.25%.
We’re now told that the price guidance has been revised at a lower level, with an updated range for a spread of between 2.5% and 3%.
Once again, VKB looks set to be another sponsor that benefits from the strong execution being seen in the catastrophe bond market, now on-track to secure its renewal issuance at the low-end of initial price guidance or below.
You can read all about this King Max Re II DAC (Series 2026-1) catastrophe bond transaction to our Deal Directory, where you can analyse details of almost every cat bond ever issued.
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