Munich Re Structures SPI’s Turkish Deal

April 30, 2013

Munich Re AG said today [Apr. 30] it facilitated structuring of a $400 million catastrophe for a Bermuda special purpose insurer for transferring earthquake risks in Turkey to the capital markets.

The transaction was arranged on behalf of the Turkish Insurance Catastrophe Insurance Pool [TCIP] which bought reinsurance protection of $400 million for earthquake risks in Turkey with a statistical return period of around one event per 100 years.

The protection is provided by Bermuda-registered special purpose insurer Bosphorus 1 Re Ltd., which issued principal at-risk variable rate notes with a three-year risk period, due May 3, 2016.

The bond has a variable rate of interest based on the risk premium and yield paid from a fund, which collateralizes the catastrophe bond.

The fund investing in short-dated US treasury bills has been established for the cat bond by Munich Re’s asset manager MEAG. The cat bond received a rating of BB+  from Standard & Poor’s, and the risk premium is 2.50 per cent per annually.

This was the second transaction facilitated by Munich Re on behalf of TCIP after the Ianus cat bond transaction in 2009.

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