Wary investors force Munich Re to pull latest ILS

Munich Re has reportedly withdrawn its latest planned cat bond from the market because of a lack of investor demand.

Queen Street X Re was seeking retrocessional protection from US hurricanes and Australian cyclones. The world’s largest reinsurer was apparently disappointed by investor interest in the deal at the pricing it was seeking meaning the deal would not have achieved the size it wanted.

An announcement from the bookrunners said that the notes would no longer be offered due to current market conditions as the pricing and capacity targets for the cat bond could not be met.

This could be seen as representing something of a watershed moment for the rapidly growing insurance-linked securities markets proving that investors have their limits and will not commit at what they perceive to be a price that is too low.

Some sources have suggested the timing of the deal was to blame. With the US hurricane season about to start, the pricing of US wind risk has already been affected in the secondary markets.