Swiss Re announced that it has entered into a transaction with Successor X Ltd. a Cayman Islands exempted company financed through the offering of insurance-linked securities, to receive up to $150 million of payments.
They would be triggered in the event of certain natural catastrophes with focus on North Atlantic hurricanes, European windstorms and California earthquakes.
The transaction covers a one year risk period ending in late 2010. “Successor X, in turn, has issued notes linked to this risk to the capital markets,” Swiss Re explained. As a “special purpose vehicle with a flexible program structure,” it could also issue future notes.
Swiss Re noted that it has previously securitized its natural catastrophe risks, “obtaining over $1.6 billion of protection through prior Successor programs.
Chief Underwriting Officer, Brian Gray, commented: “Insurance-linked securities are a cornerstone of Swiss Re’s hedging strategy. It helps us to manage peak natural catastrophe risk, lowers capital requirements and reduces earnings volatility. This solution increases our ability to assume risk from a broad spectrum of individual clients, and transform it to capital markets investors in a simple and standard format.”
Risk modeling and analysis relative to the notes was performed by EQECAT, Inc.
Source: Swiss Re – www.swissre.com
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