GC Securities has confirmed the placement of principal at-risk notes worth $100 million through a newly formed catastrophe bond, Queen Street Re IX Limited, to benefit Munich Re.
This is the ninth Queen Street cat bond to benefit Munich Re, the eighth overall issuance benefitting the reinsurer since 2011 and the first provided to it via an Irish special purpose reinsurance vehicle.
The principal at-risk notes provide three seasons of per occurrence protection for named storms affecting the US and for cyclones affecting Australia.
The protection priced approximately 15 percent lower than the similarly structured Queen Street VIII Limited that was placed in June 2013, “demonstrating the robust demand for catastrophe bonds”, commented GC Securities.
GC Securities served as sole bookrunner on Queen Street Re IX Limited. It has raised $600 million of catastrophe bond protection for Munich Re since 2011 through the offering of six of the nine Queen Street catastrophe bonds issued.
“Munich Re’s ability to offer a cat bond with a favourable peril mix of Australia cyclone paired with US hurricane in a transparent non-indemnity format at a risk layer that offers higher spread was the catalyst to the tremendous support that the capital markets provided,” commented Cory Anger, global head of insurance-linked securities structuring at GC Securities.
“Queen Street IX was one of the broadest cat bond placements with respect to investor interest and the final number of participating investors thereby allowing Munich Re to receive best execution to support application of cat bond protection to a multi-peril transaction that includes a non-peak peril.”
Chi Hum, global head of ILS distribution at GC Securities, added: “The capital markets capacity continues to grow and combined with a strong interest in diversifying cat risks has presented a market opportunity for catastrophe bond issuers that was very much a benefit to Munich Re’s Queen Street Re IX deal.”
“A higher risk return profile relative to other market offerings also facilitated good execution at an attractive price for this capacity. The market recognises and continues to support the Queen Street series of catastrophe bonds from this sophisticated capital markets issuer and we at GC Securities are pleased to have brought this to market on behalf of Munich Re.”
