An opportunity to innovate
“We don’t rest until we’ve found the best solutions for our customers. We were pleased to work with a company that looked at things the same way.”
Executive Vice President North Carolina Farm Bureau
You can see what your client needs — but it’s something that doesn’t exist. The solution? Invent it.
In the spring of 2011 the US suffered some of the worst tornado activity in history. Coming into 2012, long-time client American Agricultural Insurance Company asked Swiss Re to assist two of its farm bureau insurance company partners, COUNTRY Mutual Insurance Company® (COUNTRY) and the North Carolina Farm Bureau (NCFB). Both were looking for aggregate indemnity protection from similar weather events, but both had found capacity scarce in the traditional reinsurance market.
Russell McGuire of the Regional and National team invited Richard Pennay and Vincent Myers of the Insurance-Linked Securities team to meet with the two companies. Russ, Richard and Vince first met with COUNTRY to suggest that they might find capacity in the capital market through an insurance-linked security – specifically, a catastrophe or ‘cat’ bond. Then they met with NCFB and suggested the same. COUNTRY asked Swiss Re to structure an aggregate cat bond in November 2011. Three days later NCFB followed suit.
Aerial view of a tractor mowing a large field of grass in North Carolina
Suddenly the Swiss Re team was faced with a unique opportunity. Given that these were two farm bureaus with a history of working together, could Swiss Re help them leverage their relationship to find an innovative solution?
After weeks of brainstorming and number-crunching, a ground-breaking solution was created: COUNTRY and NCFB would be combined into one cat bond.
Over the next four months, a broad Swiss Re team structured an innovative transaction: Combine Re. It was the first cat bond to combine two unrelated companies and the first cat bond to achieve an investment grade rating since 2007. Through Combine Re, both COUNTRY and NCFB have three years of protection from a range of severe weather events, with significant cost savings for each.
“We don’t rest until we’ve found the best solutions for our customers,” says Steven Carroll, Executive Vice President at NCFB. “We were pleased to work with a company that looked at things the same way.”