Swiss Re Places $950 Million in ‘Successor Programme’ Cat Bonds

Swiss Re has obtained $950 million worth of protection against North Atlantic Hurricanes, Europe Windstorms, Californian Earthquakes and Japan Earthquakes through a natural catastrophe protection program named “Successor”, a follow-up vehicle to its “PIONEER” and “Arbor” programs.

Successor becomes the “latest in an established series of cat bonds that Swiss Re has issued since 1997, and underpins Swiss Re’s commitment to transferring insurance risks to capital markets,” said the announcement.

Although it rates Swiss Re “AA,” Standard & Poor’s assigned ratings ranging from “BB” to “B” to the various note programs involved (see following article).

Swiss Re noted that the new programs follows the previous cat bond issues; It addresses “four single peak risks (North Atlantic Hurricane, European Windstorm,California Earthquake and Japanese Earthquake).” The notes are being offered alongside in multi-peril tranches. “The main distinguishing factor of the Successor programme is the risk spectrum and triggers available across each of the perils,” said Swiss Re. “Investors can choose between different risk layers and trigger options within single peril and multi-peril tranches.”

CEO Jacques Aigrain commented: “Successor represents the next generation of cat bond programmes for Swiss Re. It provides us with protection against lower-layer earnings volatility events as well as higher-layer capital events.”

The bulletin also noted that “Successor is a shelf-offering programme that allows Swiss Re to issue securities at any time. In the private placement, which closed on 6 June 2006, $950 million of principal at-risk variable rate notes have been purchased by a variety of institutional investors according to rule 144A. This private placement was structured and underwritten by Swiss Re Capital Markets.”