Successor X gives one year cover for North Atlantic and European wind and California quake

Swiss Re closed its $150 million cat bond, Successor X.

The bond gives protection for North Atlantic hurricane, European windstorm and California earthquake. The deal covers a one year risk period ending in late 2010.

Successor X is a special purpose vehicle with a flexible program structure, which will allow subsequent issuances of notes.

Swiss Re’s Chief Underwriting Officer, Brian Gray, said: “Insurance-linked securities are a cornerstone of Swiss Re’s hedging strategy. It helps us to manage peak natural catastrophe risk, lowers capital requirements and reduces earnings volatility. This solution increases our ability to assume risk from a broad spectrum of individual clients, and transform it."

The Successor offering consists of three series of notes of $50 million each. One class of the notes is rated “B-“ by Standard & Poor’s while the other classes were not rated.

All classes of notes were issued as discount notes. Instead of purchasing the note at 100% face value, investors purchased it at a discount and expect to receive 100% of the face value at maturity if no trigger event occurs. This innovative feature allows for a more efficient use of the cash proceeds in the transaction.

Swiss Re Capital Markets acted as sole manager and bookrunner on the note issuance. The Risk modelling and analysis was performed by EQECAT.