12 Debt and contingent capital instruments

The Group enters into long- and short-term debt arrangements to obtain funds for general corporate use and specific transaction financing. The Group defines short-term debt as debt having a maturity at the balance sheet date of not greater than one year and long-term debt as having a maturity of greater than one year. For subordinated debt positions, maturity is defined as the first optional redemption date (notwithstanding that optional redemption could be subject to regulatory consent). Interest expense is classified accordingly.

The Groupʼs debt as of 31 December was as follows:

As of 31 December 2018 and 2019, operational debt, ie debt related to operational leverage, amounted to USD 2.5 billion (thereof USD 2.1 billion limited- or non-recourse) and USD 2.2 billion (thereof USD 1.9 billion limited- or non-recourse), respectively. Operational leverage is subject to asset/liability matching and is excluded from rating agency financial leverage calculations.

Maturity of long-term debt

As of 31 December, long-term debt as reported above had the following maturities:

Senior long-term debt

Subordinated long-term debt

Contingent capital instruments classified as long-term debt

Interest expense on long-term debt and contingent capital instruments classified as equity

Interest expense on long-term debt for the years ended 31 December was as follows:

In addition to the above, interest expense on contingent capital instruments classified as equity was USD 41 million and nil for the years ended 31 December 2018 and 2019, respectively.

Long-term debt issued in 2019

In March 2019, Swiss Re Finance (Luxembourg) S.A., a subsidiary of Swiss Reinsurance Company Ltd, issued 31-year guaranteed subordinated fixed rate reset step-up callable notes, which are callable after 11 years. The instruments have an aggregate face value of EUR 750 million, with a fixed coupon of 2.534% per annum until the first optional redemption date (30 April 2030). The notes are guaranteed on a subordinated basis by Swiss Reinsurance Company Ltd.

In April 2019, Swiss Re Finance (Luxembourg) S.A., a subsidiary of Swiss Reinsurance Company Ltd, issued 30-year guaranteed subordinated fixed rate reset step-up callable notes, which are callable after ten years. The instruments have an aggregate face value of USD 1 billion, with a fixed coupon of 5% per annum until the first optional redemption date (2 April 2029). The notes are guaranteed on a subordinated basis by Swiss Reinsurance Company Ltd.

In June 2019, ReAssure Group plc issued Tier 2 subordinated notes due 2029. The notes have an aggregate face value of GBP 500 million, with a fixed coupon of 5.867% per annum.

In June 2019, ReAssure Group plc issued Tier 3 subordinated notes due 2026. The notes have an aggregate face value of GBP 250 million, with a fixed coupon of 4.016% per annum. The notes were initially issued to Swiss Re Finance (Jersey) Limited and, in July 2019, were sold to a third party outside the Swiss Re Group.

In June 2019, ReAssure Group plc issued callable Tier 2 subordinated notes due 2029, which are callable in 2024. The notes have an aggregate face value of GBP 250 million, with a fixed coupon of 5.766% per annum until the first optional redemption date (13 June 2024). The notes were initially issued to Swiss Re Finance (Jersey) Limited and, in July 2019, a portion was sold to a third party outside the Swiss Re Group. In August 2019, the remaining portion was sold to the same third party.

In September 2019, Swiss Re Finance (Luxembourg) S.A., a subsidiary of Swiss Reinsurance Company Ltd, issued perpetual guaranteed subordinated fixed spread callable notes, which are callable every five years. The instruments have an aggregate face value of USD 1 billion, with a fixed coupon of 4.25% per annum until the first optional redemption date (4 September 2024). The coupon is reset every five years to the then prevailing US Treasury rate plus the initial credit spread. The notes are guaranteed on a subordinated basis by Swiss Reinsurance Company Ltd.