GC Securities, a division of MMC Securities Corp., announced the placement of USD150 million Principal At-Risk Variable Rate Notes (”Notes”) through catastrophe bond program Queen Street III Capital Limited. The transaction is the first non-U.S. hurricane exposed cat bond issued this year and specifically, since October 2010.
Utilizing a PERILS country-weighted index trigger structure, the Notes will provide Munich Re with fully collateralized, multi-year protection against windstorm events in Europe. In addition, a dedicated U.S. Treasury bill fund created by MEAG, Munich Re’s asset management company, will invest the proceeds from the Queen Street III Capital Limited offering in certain U.S. Treasury obligations.
GC Securities acted as sole bookrunner on the issuance. Munich Re is the sole arranger to the transaction and is also the issuance’s Risk Transfer Counterparty, with AIR Worldwide Corporation as the modeling firm for the transaction.
Cory Anger, Global Head of ILS Structuring, GC Securities, stated, “We are pleased to be part of another successful cat bond placement with Munich Re, utilizing the same key structural features that worked so well in previous issuances. The continued use of PERILS and a dedicated U.S. Treasury bill fund were key factors in delivering a high quality, transparent risk transfer and collateral solution to the market.”
Chi Hum, Global Head of ILS Distribution, GC Securities, added, “This transaction priced significantly lower than the initial price guidance while tripling in size from the initially announced transaction size, highlighting the investor demand for diversifying peril exposure away from U.S. hurricane. We found investors - none of which were reinsurers - eager to support a repeat issuer with diversifying peril risk.”
* Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd., which is authorized and regulated by the Financial Services Authority. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product. Cory Anger and Chi Hum are registered representatives of MMC Securities Corp.