Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Latest Successor X catastrophe bond obtains $305m of cover for Swiss Re


Swiss Re has announced the closure of its latest catastrophe bond issuance under the Successor X Ltd. SPV. This latest transaction, Successor X Ltd. Series 2011-2 has secured $305m of catastrophe protection for North Atlantic hurricane and California earthquakes for Swiss Re.

This is the fourth time Swiss Re has used the Successor X Ltd. catastrophe bond programme to transfer catastrophe risks to the capital markets. This latest Successor X transaction runs for the three year period, ending in February 2014. Previous transactions under Successor X Ltd. were a first $150m issuance in December 2009, a second for $120m in March 2010 and a third for $170m 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.”

In total Swiss Re has managed to secure approximately $2.3 billion of natural catastrophe cover through its various Successor catastrophe bond transactions.

“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.”

In this latest deal the California earthquake risk will be measured against a parametric trigger while the hurricane risk uses a PCS industry loss index trigger.

Two tranches of notes were issued. The first tranche of $165m of Class IV-E3 notes was rated ‘B’ by Standard & Poor’s. The second tranche of $140m of Class IV-AL3 notes was not rated.

As ever, fuller details are available in our catastrophe bond Deal Directory.

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