Swiss Re eyeing ‘attractive’ reinsurance market with $700m in alternative capital

Global reinsurance giant  Swiss Re has secured another $700 million of alternative capital protection that it says will allow it to further pursue growth opportunities amid favourable and attractive market conditions.

The multi-year stop-loss transaction covers underwriting risks across its entire group using a newly established segregated account of the existing Matterhorn Re, a special purpose insurer vehicle in Bermuda.

The funding is led by JP Morgan, building upon an innovative hybrid transaction concluded in April 2022, which was the first of its kind to combine bank financing and insurance-linked securities (ILS).

The segregated account is financed via an initial $700 million facility supported by JP Morgan and its institutional investor base. The transaction has been structured with the potential to increase to $1 billion in size.

The stop-loss transaction provides protection for “severe underwriting losses” across the Swiss Re Group for the financial years 2023–2027.

Swiss Re said in addition to enabling the group to grow its business in favourable market conditions, the transaction is expected to have a positive benefit for Swiss Re's regulatory and ratings capital requirements.

Philipp Rüede, head of Swiss Re Alternative Capital Partners, said: "This transaction with JP Morgan effectively provides Swiss Re with cost-efficient capital that can be deployed in the current attractive market. This deal also represents another important step on Swiss Re's Alternative Capital Partners' journey, where we are increasingly using alternative capital to address our wider capital management needs, with the objective of lowering Swiss Re's cost of equity."

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