Transaction offers the reinsurer “cost-efficient capital that can be deployed in the current attractive market”

Swiss Re has closed a multi-year stop-loss transaction with funding led by JP Morgan. The deal provides Swiss Re with $700 million in underwriting protection.

The financing builds upon a hybrid transaction concluded with JP Morgan in April 2022, which combines bank financing and insurance-linked securities.

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.”

Potential to upsize to $1 billion

The stop-loss transaction provides protection for severe underwriting losses across the Swiss Re Group for the financial years 2023–2027. In addition to enabling Swiss Re to grow its business in favourable market conditions, it is expected to have a positive benefit for Swiss Re’s regulatory and ratings capital requirements.

It utilises a newly established segregated account of the existing Matterhorn Re Ltd special purpose insurer vehicle.

The segregated account is financed via an initial $700m 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 transaction is fully collateralised, with the proceeds to be held in notes issued by the European Bank for Reconstruction and Development.

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