Swiss Re closes $700m stop-loss transaction with JP Morgan

Swiss Re has announced that it has successfully closed a multi-year stop-loss transaction with funding led by JP Morgan.

The deal will provide Swiss Re with US$700 million in underwriting protection. It builds on a hybrid transaction concluded with JP Morgan in April 2022, which was the first deal of its kind to combine bank financing and insurance-linked securities.

“This transaction with JP Morgan effectively provides Swiss Re with cost-efficient capital that can be deployed in the current attractive market,” said Philipp Rüede, head of Swiss Re Alternative Capital Partners. “This deal also represents another important step on Swiss Re 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.”

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

The deal utilises a newly established segregated account of the existing Matterhorn Re Ltd. special-purpose insurer vehicle, Swiss Re said. The segregated account is financed through an initial US$700 million facility supported by JP Morgan and its institutional investor base. The transaction has been structured with the potential to increase to US$1 billion.

Swiss Re recently announced that it would streamline its structure by splitting its reinsurance operations between P&C reinsurance and life and health reinsurance. The company also recently appointed a new chief investment officer.

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