Swiss Re transfers block of life risk to Berkshire Hathaway

Swiss Re has closed a retrocession transaction for US individual life business with Berkshire Hathaway.

Swiss Re will, on a 100% quota share basis, reinsure a closed block of yearly renewable term individual life reinsurance business, written prior to 2004, with Berkshire Hathaway Life Insurance Company of Nebraska.

The transaction is effective 1 October 2009 and will be reported by Swiss Re in the first quarter 2010. Swiss Re will receive a ceding commission in the region of CHF 1.3 billion and will release CHF 0.3 billion of capital to support the business. Swiss Re will continue to provide administration and reporting services for the subject business.

Swiss Re said it remains committed to the US life reinsurance marketplace. It believes the proceeds and capital released by the deal can be more efficiently employed to achieve a higher return.

Christian Mumenthaler, Swiss Re’s Head of Life & Health, said: “This is a significant step forward in Swiss Re’s strategy to increase capital efficiency. By transferring this block of life business, Swiss Re is monetising intangible assets and freeing up capital. The transaction puts us in an excellent position to redeploy the capital at more attractive returns.”