Munich Re has two bonds exposed to pure Japanese earthquake risk. The world’s biggest reinsurer placed a $250 million catastrophe bond dubbed Midori Ltd in October 2007 for the East Japan Railway Company. It also arranged a $300 million Japanese quake transaction, Muteki Re, for sponsoring insurer Zenkyoren in May 2008.
“The current feeling is that these bonds are unlikely to get hit,” said one European-based broker, adding that the Midori and Muteki bonds may have escaped losses altogether because both bonds specified a quake must hit a precise location in Japan in order to be hit.
S&P’s statement below: