GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC, today announced the placement of the Principal At-Risk Notes, with notional principal of $75,000,000, through a newly formed catastrophe bond, Queen Street Re VIII Limited, to benefit Munich Re. This is the eighth Queen Street cat bond to benefit Munich Re and the seventh overall cat bond issuance benefitting Munich Re since 2011.
The Principal At-Risk Notes provides 2.5 years of per occurrence protection for named storms affecting the United States and 2.9 years of per occurrence protection for cyclones affecting Australia. This protection was the first time that Munich Re has obtained protection against Australia cyclones via the capital markets.
GC Securities served as sole bookrunner on Queen Street Re VIII Limited. 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.
Principal At-Risk Variable Rate Notes due June 8, 2016
June 8, 2016
TMMF Earnings + 6.50%
David Priebe, Vice Chairman of Guy Carpenter and Head of GC Securities, said, “Munich Re’s ability to recognize market conditions to expand capital markets hedging opportunities to diversifying perils was exemplified by the Queen Street VIII Re Limited cat bond issuance. The convergence of capital markets and (re)insurance sectors is applicable to diversifying perils as well. GC Securities is honored to have assisted Munich Re in the offering of the Notes.”
Cory Anger, Global Head of ILS Structuring, GC Securities, added, “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. 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. 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.”
Chi Hum, Global Head of ILS Distribution, GC Securities, said, “Large investor flow this past year has presented a market opportunity for catastrophe bond issuers that was very much to the benefit of Munich Re’s Queenstreet Re VIII deal. Strong investor interest and a deep book facilitated good execution at an attractive price for this capacity. The market recognizes 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.”
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* Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US 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, Inc. 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.