$75 million Munich Re cat bond protects against U.S., Australia storms

Munich Re has formed a new $75 million catastrophe bond for protection against named storms in the United States and cyclones affecting Australia.

GC Securities placed the Principal At-risk Notes through the newly-formed cat bond Queen Street Re VIII Limited, providing for 2.5 years of per occurrence protection for named storms affecting the U.S. and 2.9 years of per occurrence protection for cyclones affecting Australia.

GC Securities has raised $500M of catastrophe bond protection for Munich Re since 2011 through the offering of five of the eight Queen Street catastrophe bonds issued, according to a company statement.

“Munich Re took advantage of current favorable market conditions to hedge with broad investor support for the first time its Australia cyclone risk in the cat bond market in addition to also hedging its U.S. hurricane exposures,” Cory Anger, global head of ILS Structuring at GC Securities noted in the statement.

“Using a modeled weighted industry loss trigger for Australia cyclone risk allows Munich Re to manage any basis risk while achieving liquidity through a speedy resolution,” Anger said.

“The annual reset mechanism allows Munich Re to adjust the cat bond protection to best match its underlying exposures. Munich Re’s consistent cat bond issuance has allowed it to achieve flexibility in applying this protection to regional and/or broad exposures across various lines of business within such covered areas.”