Swiss Re closes latest Successor X catastrophe bond; takes 2010 issuance over $5 billion

by Artemis on January 4, 2011

Swiss Re just managed to close their latest catastrophe bond issuance under their Successor X Ltd., Cayman Islands domiciled special purpose vehicle in 2010 which has helped to take total catastrophe bond issuance for 2010 to around $5.2 billion. In this deal $170m of Series 2011-1 notes were issued to protect Swiss Re from various natural catastrophe risks.

This latest Successor X catastrophe bond provides Swiss re with a unique combination of protection against Australian earthquake risks, U.S. north Atlantic hurricane and California earthquake. It’s the first time we’ve seen U.S. peak perils combined with Australian quake risk in a single cat bond deal and this should help to add a new level of diversification to the insurance-linked securities market.

The transaction runs for three years until December 2013 and is the third under the Successor X programme.

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.”

This deal comprises three classes of notes. $65m Class R notes which were rated B- by Standard & Poor’s, $50m Class S notesĀ  which were rated B- and $55m Class T notes which were not rated. Swiss Re Capital Markets acted as sole manager and book-runner on the deal, EQECAT provided risk modelling and analysis services.

Further details of the transaction are available in our Deal Directory and our previous article which announced the deal.

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