Products and services
Insurance plays an important part in protecting society, and the insurance industry contributes substantially to the stable economic conditions which allow the entrepreneurial spirit to flourish.
In the climate change context, insurance can help to mitigate the financial impacts of adverse weather and extreme weather events. Swiss Re has pioneered new products and novel approaches to the art of risk management in this field. The industry can also facilitate the emerging carbon markets and support the development of alternative energy sources or energy-efficient technologies.
Our objective
Our activities and achievements
Conventional reinsurance: natural catastrophe covers
Global demand for conventional natural catastrophe reinsurance has been growing significantly faster than the GDP for more than a decade. With extreme events expected to increase both in frequency and severity due to climate change, Swiss Re expects this trend to continue. As the world’s leading and most diversified reinsurer, Swiss Re is committed to continue supporting its clients’ growing needs .
Cat bonds
As the frequency and severity of insured events increase, the capital market is set to play an increasingly important role in providing catastrophe capacity. Swiss Re is committed to develop this market to serve the needs of its clients, and has been the market leader in insurance-linked securities since the inception of the market in 1997.
Weather market
According to a recent statement by the US Department of Commerce, USD 3 trillion of America’s USD 11-trillion economy is directly affected by weather. With climate change expected to increase weather variability, Swiss Re expects increasing demand for protection against adverse weather both in the industrialised countries and the emerging markets. Since 1998, Swiss Re has been one of the leading players in the emerging weather risk market, where it has about a 30% share of the OTC market worldwide, according to the latest surveys.
In September 2007, Swiss Re launched its Climate Adaptation Development Programme (CADP) at the Clinton Global Initiative 2007 meeting. The programme is designed to develop a financial risk transfer market for the effects of adverse weather in emerging countries. In a first phase, it will aim at providing financial protection against drought conditions for up to 400 000 people in Africa. In September 2007, Swiss Re, the Earth Institute at Columbia University and the Millennium Promise Alliance announced weather derivative contracts protecting several villages in Kenya, Mali and Ethiopia against severe drought. The contracts protect smallholder farmers against drought-related livelihood shocks such as food shortages and famines.
Alternative energy/clean energy infrastructure
The alternative energy market is expected to grow significantly in coming years and decades. In order to serve the sector’s growing need for effective risk transfer, Swiss Re has established internal knowledge exchange platforms and centres of competence to develop appropriate solutions.
In 1996, Swiss Re started building up a sustainability portfolio of investments in companies supporting sustainable development, with particular emphasis on efficient resource utilisation. The target investment universe focuses primarily on alternative energy, water and waste management, and recycling. Investment clusters range from infrastructure/project finance-type investments to ”Cleantech” venture capital. In 2006, the portfolio value grew substantially to CHF 376 million.
In April 2007, Swiss Re announced the successful close of the EUR 329 million European Clean Energy Fund, one of the largest funds of this type in Europe. The Fund, a UN accredited investment vehicle, provides capital to European clean energy projects, which are environmentally beneficial, generate carbon credits or tradable renewable energy certificates. Swiss Re is the anchor investor in the Fund and acts as carbon advisor for the selected projects. The Fund was placed in Europe by Swiss Re’s affiliate, Conning Research and Consulting.
Emissions markets
Insurance
The players in emerging emissions markets face a broad range of risks, including the price risk related to conventional supply-and-demand factors (fuel prices, weather, etc) as well as regulatory risks related to the framework of regional markets (European Trading System, Kyoto Protocol, etc). Swiss Re has been at the forefront in developing products and services in this area. In June 2006, RNK Capital LLC (RNK) and Swiss Re jointly implemented the carbon markets’ first insurance product for managing Kyoto Protocol-related risks for two landfill gas emission reduction projects.
Trading
In 2005 Swiss Re joined The Chicago Climate Exchange (CCX). The CCX’s ultimate objectives are to build the institutions and skills needed for cost-effective greenhouse gas emissions management, and to inform the debate on the appropriate actions for managing climate change risk in the United States, Canada and Mexico.
In 2006, Swiss Re became an active trader in the global OTC and exchange-based carbon markets.
Emissions trading project with Mobiliar
In 2008, Swiss direct insurer Mobiliar and Swiss Re teamed up to offer motorists the option to off-set the carbon emissions of their vehicles. The emissions are offset through the purchase of certified emission reductions (CER) and high-quality volutary emission reductions (VER) which are purchased through Swiss Re’s own emissions desk.
