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MUNICH—Munich Reinsurance Co. on Monday said it has obtained $100 million of coverage for U.S. hurricane and European windstorm risks from the capital markets.
Munich Re said it acquired the coverage from Ireland-based special-purpose vehicle Queen Street IV Capital Ltd., which placed a catastrophe bond in the capital markets.
Risk modeling for the bond, which is rated BB- by Standard & Poor's Corp., was provided by AIR Worldwide Corp., Munich Re said in a statement.
The bond has been placed among a diversified group of investors including investment funds, hedge funds, insurers and reinsurers, Munich Re said.
In addition to the risk premium of 7.5%, investors will receive variable-rate interest paid from a U.S. money market fund that collateralizes the bond and is rated AAAm by S&P, Munich Re said.
“Catastrophe bonds continue to be a supplementary means of transferring risk, which we use selectively,” Thomas Blunck, a board member of Munich Re, said in the statement. “The positive response by investors shows the interest of the capital markets in the transparent and noncorrelated insurance risk,” he added.
MONTE CARLO, Monaco (Reuters)—The market for insurance-linked "catastrophe" bonds looks set to shrink this year as insurance companies digest changes to models the industry uses to set conditions and prices for the bonds, reinsurer Munich Re said on Monday.