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Swiss Re Obtains $170 Million in Nat Cat Protection

Posted on 05 Jan 2011

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Swiss Re has obtained another USD 170 million in protection through the Successor X Ltd. catastrophe bond programme, covering Australia earthquake, North Atlantic hurricane and California earthquake risks. The combination of Australia earthquake risk with US peak natural catastrophe risks is a unique structure that provides additional diversification to the ILS market.

Swiss Re has entered into a transaction with Successor X Ltd. o receive up to USD 170 million of payments in the event of natural catastrophes such as Australian earthquakes, North Atlantic hurricanes and Californian earthquakes. The transaction covers a three-year risk period, ending in December 2013. Successor X issued notes linked to these risks to the capital markets. This transaction is the third takedown of the Successor X programme, after a first bond for USD 150 million in December 2009 and a second for USD 120 million in May 2010.

Prior Successor programmes have allowed Swiss Re to obtain more than USD 1.6 billion of protection, demonstrating the company's expertise in transferring natural catastrophe risk to the capital markets.

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."