Munich Re Sets Up $1.5 Billion Pandemic Risk Cat Bond Facility

February 21, 2008

Munich Re announced the establishment of a bond program amounting to $1.5 billion for the transfer of extreme mortality risk to the capital markets. The placement marks the first time that Munich Re has set up a cat bond program to address this type of risk

The first five-year series of $100 million of Principal-At-Risk Variable Rate Notes issued by Nathan Ltd. “has now been successfully priced at LIBOR plus 1.35 percent,” said the bulletin.

Munich Re explained that the bond program is designed to protect the reinsurer “against large losses deriving from an exceptional rise in mortality rates after major pandemics or similar events across the United States, Canada, England and Wales, and Germany.

“Munich Re has structured the program so that Nathan may issue future series of notes at short notice in response to increased capacity demand from Munich Re’s reinsurance clients. The transaction was placed with investors across the Americas, Europe and the Asia-Pacific region.”

The announcement warned that the “securities offered by Nathan Ltd. will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.”

Source: Munich Re –

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