Swiss Re secures alternative capital in hybrid transaction

Swiss Re has this week closed a multi-year stop-loss transaction, with financing provided by JP Morgan, among other institutional investors. The transaction, which covers underwriting risks across the entire Swiss Re Group, is understood to be the first of its kind in combining bank financing and insurance-linked securities.

Swiss Re’s group CFO John Dacey, said: "The innovative partnership is a great example of how the Group considers all sources of capital holistically and aims to further enhance its flexible capital structure. With this transaction, the Alternative Capital Partners division delivers another material contribution to Swiss Re's efficient capital management."

The transaction uses a newly-established segregated account of the existing Matterhorn Re special purpose insurer vehicle. JP Morgan provides US$1bn financing via a senior loan, while various institutional investors will participate via a US$150m investment in junior insurance-linked notes issued by the segregated account.

With this deal, Swiss Re has protection from severe underwriting losses for the financial years 2022-26.

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