Swiss Re has obtained another USD 305 million in protection through the Successor X Ltd. catastrophe bond programme, covering North Atlantic hurricane and California earthquake risks. The transaction is the fourth time that Swiss Re has used the Successor X programme to transfer specific risks into the capital markets, freeing up capacity to allow the company to take on more risks from clients.
Swiss Re has entered into a transaction with Successor X to receive up to USD 305 million of payments in the event of natural catastrophes such as North Atlantic hurricane and California earthquake. The transaction covers a three-year risk period, ending in February 2014. This transaction is the fourth takedown of the Successor X programme, after a first bond for USD 150 million in December 2009, a second for USD 120 million in March 2010 and a third for USD 170 million in December 2010.
Martin Bisping, Swiss Re’s Head of Non-Life Risk Transformation, says:
“Successor’s flexible shelf programme enables us to quickly move on favourable market conditions and secure multi-year protection at attractive terms. Continued price convergence with reinsurance is encouraging and an important driver to further grow the ILS market.”
This transaction, combined with prior Successor programmes, have allowed Swiss Re to obtain approximately USD 2.3 billion of protection, demonstrating the company’s expertise in transferring natural catastrophe risk to the capital markets.
“Our corporate hedging strategy focuses on ILS which has proven to be a very efficient and flexible way to manage our risk capital and increase the stability of our earnings,” says Matthias Weber, Swiss Re’s Head of the Property and Specialty Division. “Our extensive experience in structuring ILS transactions for ourselves means we are ideally placed to support clients in developing similar solutions for their risk management.”
The California earthquake trigger is parametric while North Atlantic hurricane has a PCS-based trigger. Proceeds of the Series 2011-2 Class IV-E3 notes will be invested in International Bank for Reconstruction and Development (“IBRD”) notes while proceeds of the Series 2011-2 Class IV-AL3 Notes will be invested in treasury money market funds.
| Class | Notional amount | Term | Rating |
| Class IV-E3 | USD 165 m | 3 years | B (sf) S&P |
| Class IV-AL3 | USD 140 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
