Swiss Re Gets $150M In Cat Cover

Swiss Re announced it has obtained $150 million in backup protection against five catastrophic natural events in the United States, Europe and Japan.

The securitization or special purpose vehicle, acting like a catastrophe bond, will cover North Atlantic hurricane, European windstorm, California earthquake, Japanese earthquake and Japanese typhoon, the company said.

According to the company, the program, titled Vega Capital Ltd., is the first natural catastrophe securitization to use a cash reserve account to enhance protection to note holders.

Vega, Swiss Re said, protects the firm on both a multi-event and multiperil basis. It involves four classes of notes, issued and ranked in order of seniority.

Vega provides transparency to investors, who provide Swiss Re with the protection, by utilizing index- and modeled loss-based triggers with fixed risk profiles. Investors can choose between different risk layers while achieving diversification across five natural catastrophe risks.

Brian Gray, Swiss Re's head of Property and Specialty Products division, said: "Vega represents a positive evolution in the structure of cat bond programs for Swiss Re. It provides us with protection for low layer earnings volatility for our peak natural catastrophe perils, over multiple events."

Vega is a shelf-offering program that allows issuance of securities at any time. The private placement closed Friday and involves $150 million of principal at-risk variable rate notes which have been purchased by a variety of institutional investors, Swiss Re said.