Swiss Re issues first Australian catastrophe bond

The insurance company bundles $100 million of earthquake and cyclone exposures into variable rate notes issued in the US.
February 08, 2006
Following on from similar bonds issued in Japan and Taiwan, Swiss Re has launched a $100 million catastrophe bond covering natural disasters in Australia. The three-year principal-at-risk variable rate notes have been sold to investors under 144a rules and are rated BB by Standard PoorÆs.

Swiss Re says the note program, launched through a special purpose vehicle called Australis, can be upsized to $250 million depending on how much new non-life business it writes in Australia. ôThe bonds have been fully collateralized, so they are credit risk free,ö says Keith Scott, Head of the insurance companyÆs property and casualty business in Australia and New Zealand.

The bonds pay a coupon of Libor plus 4% and...
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