Swiss Re Successfully Places First Ever Bond Linked to Central American Earthquakes

Swiss Re Successfully Places First Ever Bond Linked to Central American
Earthquakes

NEW YORK, Jan. 22 /PRNewswire/ -- Swiss Re has successfully structured and
placed USD 85 million of securities covering windstorm events in the US as
well as earthquakes in California and Central America.
The bond is the first ever linked to Central American earthquakes. The
initial offering of notes by GlobeCat Ltd. closed on Dec. 21, 2007. The risk
modelling company EQECat is used as the calculation agent and for the initial
risk analysis.
As part of an ongoing program, Swiss Re's Capital Markets structured and
placed the securitisation and acted as the sole book runner for the initial
$85 million offering. The first two tranches of the issuance cover losses due
to catastrophic hurricanes and earthquakes in the United States.
The third tranche is the first to cover exposures in Central America. The
GlobeCat Ltd. LAQ tranche covers the non-peak perils of Guatemala and El
Salvador earthquakes. The trigger is the first of its kind in that the index
is based on the population exposed to certain levels of ground-shaking
intensity as measured by MMI. The index is modeled after the PAGER system
developed by the USGS within the Global ShakeMap program.
The goal of the GlobeCat Ltd securitization is to create a platform and a
model in which charitable foundations, governmental relief organizations and
corporations can leverage charitable donations or governmental/international
funding to the benefit of developing nations affected by natural disasters.
Such a program will help these organizations in becoming more pro-active in
planning and anticipating relief needs in areas of the world affected by
severe catastrophes. In case of a triggering event, the funds will be quickly
available for relief efforts rather than being raised post-event.
The GlobeCat Securitization has shown that this concept is viable and that
donation to coverage leverage can be as high as 45 times. ($1mm of donations
can be used for $45 million in relief) Other triggers are being developed for
a wide variety of disasters. Details of the notes placed in the initial
offering are:

Class Size in mio. Rating Expected Maturity Coupon
LAQ USD 25 Ba3 12/30/08 Libor3mo +210 b.p.
USW USD 40 B3 1/2/2013 Libor3mo + 925 b.p.
CAQ USD 20 Ba1 1/2/2013 Libor3mo + 600 b.p.

Swiss Re
Swiss Re is the world's leading and most diversified global reinsurer. The
company operates through offices in more than 25 countries. Founded in Zurich,
Switzerland, in 1863, Swiss Re offers financial services products that enable
risk-taking essential to enterprise and progress. The company's traditional
reinsurance products and related services for property and casualty, as well
as the life and health business are complemented by insurance-based corporate
finance solutions and supplementary services for comprehensive risk
management. Swiss Re is rated "AA-" by Standard & Poor's, "Aa2" by Moody's and
"A+" by A.M. Best.
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SOURCE Swiss Re

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