Swiss Re made two major transactions this week, investing in Asian insurance products and underwriting a European windstorm catastrophe bond.
On Oct. 15, Swiss Re Capital Markets, the reinsurer's broker dealer arm, underwrote a $474 million insurance-linked security deal, issued by Calypso Capital II Limited on behalf of AXA, in order to cover European windstorms.
The transaction covers Europe windstorm losses via $250 million in Class-A notes with a three-year risk period and $223 million in Class B notes with a four-year risk period.
“The two classes of notes have been structured with a variable reset which provides AXA with the flexibility to easily integrate the notes within their traditional program,” says Jean-Louis Monnier, director and head of ILS Europe at Swiss Re Capital Markets.
The notes protect against per-occurrence windstorms in Belgium, Denmark, France (excluding French overseas territories), Germany, Ireland, Luxembourg, The Netherlands, Norway, Sweden, Switzerland, and the United Kingdom.
On Oct. 16, Swiss Re made a $425 million investment in FWD Group, a company offering insurance and some life and pensions products in Hong Kong, Macau and Thailand.
“FWD is an exciting new regional player which will bring attractive insurance products to help address the rapidly growing needs of consumers and significant protection gaps across Asia,” says Michael M. Liès, CEO of Swiss Re Group.
Swiss Re's investment in FWD consists of an initial investment for a 12.3% stake in FWD and a commitment for additional investments to fund FWD's planned expansion across Asia. Committed capital brings the total transaction size to $425 million. Swiss Re's ultimate ownership stake in FWD will be determined based on the amount of committed capital enterprise risk management.
The agreement was made in partnership with Pacific Century Group, which acquired ING's life insurance operations in Macau and Thailand and pensions operations, general and life insurance in Hong Kong, renaming the businesses “FWD” in August 2013.
Swiss Re's initial investment in FWD is expected to close in the first quarter of 2014, subject to necessary regulatory approvals.
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