Swiss Re announced today the closing of a US individual life retrocession transaction with Berkshire Hathaway. The transaction builds on Swiss Re’s tradition of portfolio steering and reinsurance risk transformation and will improve its capital efficiency.
Under the terms of the contract 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 believes the proceeds and capital released by this transaction can be more efficiently employed to achieve a higher return. Swiss Re remains committed to the US life reinsurance marketplace as well as to its clients, and, through this transaction, will be in an even stronger position to respond to the rising demand for reinsurance solutions.
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.”
