Munich Re secures $75M cat bond for U.S. hurricane, European windstorm risks

Munich Reinsurance Co. has secured $75 million in coverage for U.S. hurricane and European windstorm exposures through a catastrophe bond issue.

The bonds were issued by Queen Street VII Re Ltd., a Bermuda special-purpose insurer. It was the third time this year that Munich Re has transferred storm risks to the capital markets using the Queen Street vehicle.

The bonds, which mature on April 8, 2016, received a B (sf) rating from Standard & Poor's Corp. Risk modeling for the deal, which closed Wednesday, was done by AIR Worldwide Corp.

Willis Capital Markets & Advisory, the insurance industry investment banking operation of Willis Group Holdings P.L.C., acted as sole bookrunner on the catastrophe bond deal.

Munich Re said U.S. hurricane loss events would be quantified on the basis of county- and line-of-business-weighted market losses, while European windstorms would be quantified based on market losses zone-weighted by Catastrophe Risk Evaluating and Standardizing Target Accumulations (CRESTA). U.S. market losses will be determined by Property Claim Services, and European windstorm market losses by Perils A.G.