Munich Re boosts capital base with first-ever green bond

Munich Re has issued a €1.25 billion green bond for the first time in its history, to fund sustainable energy and other projects that will help drive a climate-friendly transformation of the economy.

The reinsurer said that it is strengthening its capital base with an eye towards growth opportunities that are emerging in many reinsurance markets.

In addition, it noted that subordinated bonds are an important capital management tool that, among other things, will give Munich Re the option of calling and redeeming outstanding subordinated bonds in 2021 and 2022. The bond has a coupon of 1.25 percent and will mature in 2041.

The company will use the raised capital to finance or refinance sustainable projects including investments of equity and debt in renewable energy, energy efficiency, clean transportation, green buildings, sustainable water and wastewater management, the eco-efficient and/or circular economy, and the environmentally sustainable management of living natural resources and land.

"By launching this green bond, we are taking a pioneering role in sustainable finance and responding to the growing demand for climate-friendly investment options," said Christoph Jurecka, chief financial officer of Munich Re.

"We are also strengthening Munich Re’s capital base at a time when hardening reinsurance markets are offering numerous opportunities for profitable growth."

Munich Re’s investments in renewable energies currently amount to about €1.6 billion, which it says is set to rise up to €2.8 billion in coming years. By joining the Net-Zero Asset Owner Alliance, the reinsurer has undertaken to transition its entire investment portfolio to net-zero greenhouse gas emissions by 2050.