Swiss Re expect US$900m of net payouts from hurricane Sandy

Swiss Re announced on Monday that they expect US$900m of net payouts from Hurricane Sandy (but subject to some uncertainty with future revisions likely). Whilst significantly higher than market expectations it is considered to be immaterial to the credit quality of Swiss Re.

Equity prices fell around 1.5% on the news (against a boarder Swiss equity market fall of 0.5%) and credit spreads on both credit default swaps and cash bonds were essentially unchanged. No price or spread change has been observed on the A$ Tier 1 hybrid securities since the news was released to the market.

We continue to view Swiss Re as a very strong credit and their Tier 1 hybrid securities amongst the best risk-reward investment options in the fixed income market.