Swiss Re obtains USD 130 million in natural catastrophe protection for North Atlantic hurricane and European windstorm, transaction marks fifth takedown of Successor X programme
09 November 2011, Zurich
Swiss Re has obtained a further USD 130 million in protection through the Successor X Ltd. ("Successor X") catastrophe bond programme covering North Atlantic hurricane and European windstorm. The transaction marks the fifth time that Swiss Re has used the Successor X programme to transfer risks into the capital markets.
Swiss Re has entered into a transaction with Successor X to receive up to USD 130 million of payments in the event of European windstorms and of North Atlantic hurricanes of a certain magnitude. The flexible structure of the Successor X programme enables Swiss Re to move quickly in response to market conditions, securing multi-year protection at terms which are attractive to the company and investors.
Covering a four-year period, ending in November 2015, the transaction follows four previous take-downs from the Successor X programme, after a first for USD 150 million in December 2009, a second for USD 120 million in May 2010, a third for USD 170 million in December 2010 and a fourth for USD 305 million in February 2011.
Martin Bisping, Swiss Re's Head of Non-Life Risk Transformation, says:
"After a brief dip in returns in the wake of the Japan earthquake, the ILS marketplace has rebounded, demonstrating the commitment that investors have to catastrophe bonds. Successor X allows us to seize opportunities to transfer risk at favourable terms and to support growing demand for natural catastrophe capacity from our clients."
This transaction combined with prior Successor programmes has allowed Swiss Re to obtain USD 2.39 billion of protection against natural catastrophe events.
"Insurance-linked securities remain a cornerstone of our hedging strategy, giving us a competitive advantage by allowing us to manage peak catastrophe risk more effectively," says Matthias Weber, Swiss Re's Head of the Property and Specialty Division.
The Successor X notes were sold in a private placement pursuant to Rule 144A of the U.S. Securities Act of 1933, as amended, (the “Securities Act”) and have not been, and will not be, 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.
Notes to editors
The Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer. Dealing direct and working through brokers, its global client base consists of insurance companies, mid-to-large-sized corporations and public sector clients. From standard products to tailor-made coverage across all lines of business, Swiss Re deploys its capital strength, expertise and innovation power to enable the risk taking upon which enterprise and progress in society depend. Founded in Zurich, Switzerland, in 1863, Swiss Re serves clients through a network of 56 offices globally and is rated "AA-" by Standard & Poor's, "A1" by Moody's and "A" by A.M. Best. Registered shares in the Swiss Re Group holding company, Swiss Re Ltd, are listed on the SIX Swiss Exchange and trade under the symbol SREN.
Swiss Re Capital Markets
In the U.S., securities products and services are offered through Swiss Re Capital Markets Corporation, a registered broker dealer and a member of FINRA and SIPC. Swiss Re Capital Markets Limited is authorized and regulated in the U.K. by the Financial Services Authority. Both Swiss Re Capital Markets Corporation and Swiss Re Capital Markets Limited, together Swiss Re Capital Markets, are wholly owned subsidiaries of Swiss Re Ltd.
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- the direct and indirect impact of the continuing deterioration in the financial markets and the efficacy of efforts to strengthen financial institutions and stabilize the credit markets and the broader financial system;
- changes in global economic conditions and the effects of the global economic downturn;
- the occurrence of other unanticipated market developments or trends;
- Swiss Re’s ability to maintain sufficient liquidity and access to capital markets, including sufficient liquidity to cover potential recapture of reinsurance agreements, early calls of debt or debt-like arrangements and collateral calls under derivative contracts due to actual or perceived deterioration of Swiss Re’s financial strength;
- the effect of market conditions, including the global equity and credit markets, and the level and volatility of equity prices, interest rates, credit spreads, currency values and other market indices, on Swiss Re’s investment assets;
- changes in Swiss Re’s investment result as a result of changes in its investment policy or the changed composition of Swiss Re’s investment assets, and the impact of the timing of any such changes relative to changes in market conditions;
- uncertainties in valuing credit default swaps and other credit-related instruments;
- possible inability to realize amounts on sales of securities on Swiss Re’s balance sheet equivalent to its mark-to-market values recorded for accounting purposes;
- the outcome of tax audits, the ability to realize tax loss carry forwards and the ability to realize deferred tax assets (including by reason of the mix of earnings in a jurisdiction or deemed change of control), which could negatively impact future earnings;
- the possibility that Swiss Re’s hedging arrangements may not be effective;
- the lowering or loss of one of the financial strength or other ratings of one or more companies in the Group;
- risks associated with implementing Swiss Re’s business strategies;
- the cyclicality of the reinsurance industry;
- uncertainties in estimating reserves;
- the frequency, severity and development of insured claim events;
- acts of terrorism and acts of war;
- mortality and morbidity experience;
- policy renewal and lapse rates;
- extraordinary events affecting Swiss Re’s clients and other counterparties, such as bankruptcies, liquidations and other credit-related events;
- political risks in the countries in which Swiss Re operates or insures risks;
- the impact of current, pending and future legislation and regulation affecting us or our ceding companies, and regulatory and legal actions;
- the impact of significant investments, acquisitions or dispositions, and any delays, unexpected costs or other issues experienced in connection with any such transactions, including, in the case of acquisitions, issues arising in connection with integrating acquired operations;
- changing levels of competition; and
- operational factors, including the efficacy of risk management and other internal procedures in managing the foregoing risks.
These factors are not exhaustive. We operate in a continually changing environment and new risks emerge continually. Readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.