Swiss Re transfers part of US reinsurance business to Berkshire Hathaway

Jan 19, 2010 (Datamonitor via COMTEX) -- Swiss Re has announced the closing of a US individual life retrocession transaction with Berkshire Hathaway. 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.

Swiss Re said that the transaction builds on its tradition of portfolio steering and reinsurance risk transformation and will improve its capital efficiency.

The transaction is effective October 2009 and will be reported by Swiss Re in the first quarter of 2010. Swiss Re will receive a ceding commission in the region of CHF1.3 billion and will release CHF0.3 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 the transaction can be more efficiently employed to achieve a higher return.

Christian Mumenthaler, Swiss Re's head of life and health, said: "The transaction is a significant step forward in Swiss Re's strategy to increase capital efficiency. By transferring this block of life business, Swiss Re is monetizing intangible assets and freeing up capital. The transaction puts us in an excellent position to redeploy the capital at more attractive returns."

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