VKB could upsize debut King Max Re cat bond to €175m

German domestic market insurance company Versicherungskammer Bayern Versicherungsanstalt des oeffentlichen Rechts’ (VKB) has lifted the target size for its debut King Max Re DAC 2023 catastrophe bond issuance to provide it as much as €175 million of multi-peril reinsurance.

Initially, VKB, which is one of the top-ten largest insurance groups in Germany, was using its VKB Re reinsurance entity as cedent for this cat bond to secure €150 million in multi-peril reinsurance on a collateralized basis with this first King Max Re catastrophe bond.

We’re now told that the insurer has raised its target, with up to €175 million of protection now sought.

The King Max Re DAC cat bond will provide the VKB insurance group with a source of indemnity and per-occurrence reinsurance protection against losses from the perils of earthquake, hailstorm, flood and windstorm in Germany, over a three year term beginning January 1st 2024.

Upsizing the deal to €175 million, if successful, will secure VKB more coverage across the layer of its reinsurance tower that this cat bond covers, attaching at €900 million of losses and exhausting at €1.1 billion.

The now up to €175 million of Series 2023-1 Class A cat bond notes being offered by King Max Re DAC come with an initial expected loss of 0.81% and were first offering a spread of 4.25% to 5% to cat bond investors.

We’re now told that price guidance has been fixed, for a spread of 5% to be paid, while the size of the offering has yet to be finalised, with pricing due later today.

You can read all about this King Max Re DAC 2023 catastrophe bond  transaction to our Deal Directory, where you can analyse details of almost every cat bond ever issued.