Swiss Re has entered into a transaction with Successor X Ltd. (“Successor X”) to receive up to USD 170 million of payments in the event of natural catastrophes such as Australian earthquakes, North Atlantic hurricanes and Californian earthquakes. The transaction covers a three-year risk period, ending in December 2013. Successor X issued notes linked to these risks to the capital markets. This transaction is the third takedown of the Successor X programme, after a first bond for USD 150 million in December 2009 and a second for USD 120 million in May 2010.
Prior Successor programmes have allowed Swiss Re to obtain more than USD 1.6 billion of protection, demonstrating the company’s expertise in transferring natural catastrophe risk to the capital markets.
Martin Bisping, Swiss Re’s Head of Non-Life Risk Transformation, said: “Insurance-linked securities transform (re)insurance risks into an investor-friendly asset class. ILS are a fundamental part of our own hedging strategy, allowing us to manage catastrophe risk, lowering capital requirements and reducing earnings volatility. ILS also form part of our core offering to clients. This transaction demonstrates our ability to take on risk from a broad range of clients and transfer it to capital markets investors in a simple and standard format.”
“Swiss Re has a track record of introducing non-peak risks to the capital market,” Bisping continued. “By adding Australia earthquake to this transaction, we have created a bond that offers additional diversification for investors and have once again been able to demonstrate our capacity for innovation in this field.”
| Class | Notional amount | Term | Rating |
| Class R | USD 65 m | 3 years | B- |
| Class S | USD 50 m | 3 years | B- |
| Class T | USD 55 m | 3 years | Not rated |
Swiss Re Capital Markets acted as sole manager and book-runner on the note issuance. Risk modelling and analysis were performed by EQECAT, Inc.
The Successor X notes were sold in a private placement pursuant to Rule 144A of the US Securities Act of 1933, as amended, (the Securities Act) and have not been registered under the Securities Act or any state securities laws; they may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
Source : Swiss Re Press Release
