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Swiss Re Completes Offering of Dual Trigger Hybrid Securities
- Client News
- October 7, 2013
Practices
Paul, Weiss client Swiss Reinsurance Company Ltd completed an
offering of CHF 175 million of subordinated contingent write-off
securities with a scheduled maturity in 2045. This is the first
offering of contingent convertible instruments to combine a
solvency event trigger and an insurance event trigger. The
securities can be permanently written down to zero, and investors
lose their principal, if the solvency ratio of Swiss Reinsurance
Company Ltd falls below a predetermined threshold, or if an
Atlantic hurricane causes a minimum amount of industry insured
losses. The securities were offered only to qualifying investors in
Switzerland, Hong Kong, Singapore and the United Kingdom. Credit
Suisse AG, Deutsche Bank, UBS AG and Zürcher Kantonalbank acted as
joint lead managers.
The offering has attracted significant commentary, with
Euroweek quoting an industry participant that it was "a
structure that has never been used" and Artemis noting "[the]
trigger is unique as far as we know in the world of contingent
capital...as it includes an insurance event, making it very similar
to a catastrophe bond." The offering follows Swiss Re's offering in
March of $750 million of subordinated contingent write-off loan
notes with a scheduled maturity in 2024, which was the first
offering of contingent convertible instruments by an insurance
company to include a permanent write-off feature. The March
offering contained only a solvency event trigger.
The Paul, Weiss team advising Swiss Re included corporate partner
Mark
Bergman.