Swiss Re completes USD 245 million securitisation of in-force life insurance policies

21 January 2005, Zurich

Swiss Re has successfully completed its first securitisation of future profits from a portfolio of US life insurance policies. The USD 245 million issue benefits Swiss Re by transferring insurance risk to the capital markets, thereby increasing capital efficiency.

John Coomber, Swiss Re's Chief Executive Officer comments: "Through this transaction, Swiss Re is delivering on our strategic objective of accelerating the balance sheet through risk securitisation."

The issue, which closed on 20 January 2005, was issued to a variety of institutional investors. It consists of three separate tranches of securities, paying an average pre-tax coupon of 6.96% with an expected maturity ranging between six and 11 years.

The asset backing the securitisation is the expected future profits from five blocks of life insurance business previously acquired by Swiss Re through Admin ReSM transactions. Investors' return is subject to various factors that reflect the risks of the underlying business, including mortality, persistency and investment risks.

By transforming insurance risk into a tradeable security Swiss Re is able to turn intangible assets into cash, which otherwise would only emerge over time. The transfer of risk to the capital markets allows Swiss Re to more effectively use its capital. As a result, shareholders' return on the risks flowing through Swiss Re's balance sheet is improved.

John Fitzpatrick, Head of Swiss Re's Life, Health Business Group comments: "This innovative transaction enables us to manage our capital more effectively. Our ambition is to create a flexible financing system to support our strategy of growing our Admin ReSM business."

Notes to editors

The securities discussed in this news release have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Swiss Re

Swiss Re is one of the world's leading reinsurers and the world's largest life and health reinsurer. The company operates through more than 70 offices in over 30 countries. Swiss Re has been in the reinsurance business since its foundation in Zurich, Switzerland, in 1863. Through its three business groups Property, Casualty, Life, Health and Financial Services, Swiss Re offers a wide variety of products to manage capital and risk. Traditional reinsurance products, including a broad range of property and casualty as well as life and health covers and related services, are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated "AA" by Standard, Poor's, "Aa2" by Moody's and "A+" by A.M. Best.

Admin ReSM - Administrative Reinsurance is the acceptance of a closed block of in-force life and health insurance business either through acquisition or reinsurance, typically assuming the responsibility to administer the underlying policies. Admin ReSM can also extend to the acquisition of an entire life insurance company. Admin ReSM provides the benefits of reducing administrative costs and freeing up capital.

Cautionary note on forward-looking statements

Certain statements contained herein are forward-looking. These statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical fact or current fact. Forward-looking statements typically are identified by words or phrases such as 'anticipate,' 'assume," 'believe,' 'continue', 'estimate', 'expect', 'foresee', 'intend,' 'may increase' and 'may fluctuate' and similar expressions or by future or conditional verbs such as 'will,' 'should,' 'would' and 'could.' These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause Swiss Re's actual results, performance, achievements or prospects to be materially different from any future results, performance, achievements or prospects expressed or implied by such statements. Such factors include, among others:

  • cyclicality of the reinsurance industry;
  • changes in general economic conditions, particularly in our core markets;
  • uncertainties in estimating reserves;
  • the performance of financial markets;
  • expected changes in our investment results as a result of the changed composition of our investment assets or changes in our investment policy;
  • 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;
  • changes in rating agency policies or practices;
  • the lowering or withdrawal of one or more of the financial strength or credit ratings of one or more of our subsidiaries;
  • changes in levels of interest rates;
  • political risks in the countries in which we operate or in which we insure risks;
  • extraordinary events affecting our clients, such as bankruptcies and liquidations;
  • risks associated with implementing our business strategies;
  • changes in currency exchange rates;
  • changes in laws and regulations, including changes in accounting standards and taxation requirements; and
  • changes in competitive pressures.

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.