Swiss Re has announced that it has successfully closed a multi-year stop-loss transaction with funding led by JP Morgan.
The transaction will provide Swiss Re with US$700 million in underwriting protection. It builds on a hybrid transaction completed in April 2022 with JP Morgan, which was the first transaction of its kind to combine bank financing and insurance-linked securities.
“This transaction with JP Morgan effectively provides Swiss Re with cost-effective capital to deploy in the currently attractive market,” said Philipp Rüede, Head of Swiss Re Alternative Capital Partners. “This transaction also represents another important step in the journey of Swiss Re Alternative Capital Partners, where we are increasingly using alternative capital to meet our broader capital management needs, with the aim of reducing Swiss Re’s cost of equity.”
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The stop-loss transaction provides protection against severe underwriting losses across the Swiss Re Group for financial years 2023 to 2027, the company said. As well as enabling the group to grow its business in favorable market conditions, the transaction is expected to have a positive impact on its regulatory and ratings capital requirements.
The transaction uses a newly established segregated account of existing specialty insurer Matterhorn Re Ltd., Swiss Re said. The segregated account will be funded by an initial $700 million facility backed by JP Morgan and its institutional investor base. The transaction was structured with the potential to grow to $1 billion.
Swiss Re recently announced that it would streamline its structure by splitting its reinsurance business into non-life reinsurance and life and health reinsurance. The company also recently appointed a new chief investment officer.
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2023-03-08 07:49:18
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