Munich Re gets U.S. hurricane, Australia cyclone coverage through cat bond

Munich Re has used the capital markets to acquire coverage for hurricane risks in the United States and Australian cyclone risks, with a total volume of US$100 million.

The catastrophe bond, which matures in June 2017, is through Queen Street IX Re Limited, a special purpose reinsurer registered in Ireland.

The risk modelling was developed by AIR Worldwide, Munich Re noted.

“With catastrophe bonds we can efficiently cover our single peak exposures like US hurricane and Australian cyclone and thereby improve the diversification of our overall portfolio,” Munich Re board member Thomas Blunck said in a press release Thursday.

Through the transaction, Munich Re obtains relief from losses from extreme events with a statistical return period of between 65 and 80 years per event, according to the company’s press release.

“Loss events will be quantified on the basis of county- and line-of-business-weighted market losses determined by PCS (Property Claim Services) with respect to U.S. hurricanes, and on the basis of modelled losses calculated by AIR Worldwide in respect of Australian cyclones,” it said.