Swiss Re, a prominent global reinsurer, is set to significantly increase the size of its latest North American earthquake catastrophe bond, the Matterhorn Re Ltd. (Series 2025-3). The initial target of $75 million has been uplifted to $100 million, reflecting robust investor demand and declining pricing. This move demonstrates the company's strategic efforts to secure more retrocessional capacity at competitive rates.
This particular issuance marks Swiss Re's fourteenth under the Bermuda-based Matterhorn Re program and its third for the current year. Despite the increased offering, the pricing for both tranches of notes has fallen to the lower end of the revised ranges. Specifically, the Class A notes, initially targeting $50 million and now sized at $60 million, have seen their pricing fixed at 2.5%, down from an initial guidance of 2.75% to 3.75%. Similarly, the riskier Class B notes, which have expanded from $25 million to $40 million, are priced at 3.75%, reduced from their original range of 4% to 4.5%.
The catastrophe bond will provide Swiss Re with three years of retrocessional protection against North American earthquake losses, covering the United States (excluding Hawaii), D.C., and Canada. The coverage is based on an annual aggregate and weighted PCS industry loss index trigger. The successful upsizing and favorable pricing highlight the continued appeal of catastrophe bonds as a mechanism for transferring seismic risk and the strong confidence investors place in Swiss Re's offerings. This transaction not only bolsters Swiss Re's protection but also showcases the efficiency and liquidity of the cat bond market.
This successful transaction underscores the vitality and growing sophistication of the catastrophe bond market, offering innovative solutions for managing complex risks. By securing this essential protection at favorable terms, Swiss Re reinforces its financial stability and capacity to support communities in the aftermath of natural disasters. Such proactive measures are crucial for building resilience and ensuring timely recovery when unforeseen events occur, contributing to a more secure future for all.
