Munich Re has issued its biggest catastrophe bond of $US190 million ($263.6 million) to provide cover for its reinsurance business from potential US hurricane and European windstorm risks.

The German reinsurer used its Irish-registered Queen Street XII Re, a reinsurance vehicle, for the transaction.

The bond has a variable rate of interest based on the risk premium, equal to 5.5% per annum, and will mature on April 8 2020.

“This transaction slightly increases the cover for natural catastrophe exposure and its diversification in our books at conditions which are at the same time attractive for investors,” Board Member Thomas Blunck said.

Munich Re has previously issued five catastrophe bonds worth a total of $US450 million ($624.3 million) to cover US hurricanes and cyclones in Australia.

“For many years we have used a wide range of financial market instruments such as catastrophe bonds and swaps to transfer risk to the capital markets,” it says.

“In view of the volatility of the available retrocession and reinsurance capacity and of the pricing cycle, we regard capital market solutions as viable options for covering insurance risks.”