Munich Re has provided Massachusetts Property Insurance Underwriting Association (MPIUA) a $96m catastrophe bond issuance that transfers hurricane risk in Massachusetts to the capital markets.
Munich Re acted as joint lead manager in the transaction, reinsured the risk via its US operation and placed the bond with institutional investors in the EU and Switzerland via its placement entity.
Munich Reinsurance America, has reinsured a portion of a catastrophe hurricane risk layer of the MPIUA that have been fully retroceded to Cayman Islands-licensed special purpose reinsurer, Shore Re, providing coverage up to a maximum of $96m. Shore Re issued under the program principal at-risk variable rate notes with a three-year risk period.
Munich Re has added that the issuance provides cover against extreme event losses caused by hurricanes in Massachusetts with a statistical return period of around 70 years, and pays interest for the risk at 700 basis points and is rated BB by Standard & Poor’s.
Tony Kuczinski, president and CEO of Munich Reinsurance America, said: “With the Shore Re transaction we have been able to provide our US clients with a capital markets transaction for the second time within two months.
Munich Re offers its clients the full spectrum of risk transfer solutions from traditional reinsurance to capital market solutions. The capital markets constitute a good complementary risk carrier for specialized peak risks like Massachusetts hurricane.”