Global reinsurance firm Munich Re has signed an agreement with Eolus, the Swedish wind power developer, which will see all the shares in a wind farm development being acquired by the reinsurers MEAG asset management unit.
Investment returns remain vital to reinsurers, perhaps more so in the low yield environment, but diversification is also key and Munich Re has been achieving this by buying into projects such as wind energy developments.
The wind farm named Jenåsen is made up of 23 Vestas wind turbines, which can produce a capacity of 79 MW. The electricity produced by the wind farm will be sold to technology giant Google, through a power purchase agreement.
Munich Re’s MEAG will acquire all of the shares in the project company that owns the wind farm, for a purchase price of EUR 106 million. The deal will see payment made once the development of the wind farm is completed in the summer of 2018.
“I’m proud that Eolus yet again is entrusted to deliver a wind farm to Munich Re. Jenåsen is the sixth wind farm developed by Eolus that MEAG/Munich Re invests in. These investments total about 147 MW,” commented Eolus CEO Per Witalisson.
“We greatly value the relationship that Eolus has formed with MEAG/Munich Re. We will do our utmost to meet the expectations that follows with managing their large investments in Swedish wind power,” added Eolus deputy CEO and COO Marcus Landelin.
“We are pleased to announce a further project acquisition in Sweden. The investment makes an attractive and lasting contribution to the risk diversification of our portfolio and helps to cover Munich Re’s long-term liabilities deriving from its insurance business,” MEAG Managing Director Holger Kerzel also said.
It’s not clear whether any risk transfer underpins the transaction, perhaps a revenue guarantee or weather hedge to make the investment even more appealing and profitable for Munich Re.