Reinsurer cedes European windstorm risk to Allianz Risk Transfer

Munich Re has entered into an industry loss warranty (ILW) contract with Allianz Risk Transfer that will provide the German reinsurer with €50m of protection against European windstorm for one year. Coverage commenced on July 1.

The attachment point for payment under the ILW is an industry loss of roughly €8.8bn. Munich Re will receive the full €50m under the contract if industry losses reach €12bn. Reinsurance broker Willis Re arranged the transaction, while the industry loss estimates that trigger the payout will be supplied by catastrophe data provider PERILS.

This latest deal takes the total value of insurance risk placements based on a PERILS loss index to over $250m for the first half of 2010.

“This is the second transaction involving Munich Re where the PERILS index is used as the trigger,” said Hans Joachim Thoenes, head of retrocession at Munich Re, in a statement. “Our main objective remains to contribute to the creation of a more liquid and standardised ILS [insurance linked securities] and ILW market for European windstorm risk which is for the benefit of our clients in the insurance industry, potential investors and Munich Re.”