LONDON, Nov 3: Munich Re has transferred $75 million of its own US hurricane and European windstorm risks to the capital markets by placing a catastrophe bond with international investors, it said on Tuesday.

Insurers and reinsurers use catastrophe bonds to transfer to capital market investors major risks on their books, such as for storms and earthquakes, freeing up capital to underwrite new insurance business.

“With this bond, Munich Re obtains relief for losses from extreme events with a combined statistical return period of around 35 years,” the world’s biggest reinsurer said in a statement.

Munich Re acquired coverage for the risks from Queen Street V Re Ltd, a Bermuda-based special purpose insurer, which then placed $75 million worth of principal-at-risk notes with a diversified group of international investors, including hedge funds, insurers and reinsurers.

The single $75 million tranche of notes was originally marketed with a pricing guidance of 9.00 per cent to 9.75 per cent above the collateral money market fund return.—Reuters