The underwriter said it has entered into a transaction with VITA Capital IV Ltd. (“Vita IV”) to receive up to $75 million of payments in the event of severe population mortality in United States or the United Kingdom.  It comes as the UK and US are still grappling with the full impact of the H1N1 virus as the traditional winter flu season begins in earnest.

The new agreement covers a five-year risk period starting in 2009 and ending in 2014. Vita IV, in turn, has issued notes linked to this risk into the capital markets.

The deal is a continuation of Swiss Re’s hedging strategy, “enabling the company to manage extreme mortality exposures in a capital-efficient manner”, it said.

Swiss Re’s Chief Underwriting Officer, Brian Gray, added: “This Vita transaction will help us to manage our exposure to peak mortality risk in a capital efficient way, to meet increased client demand for extreme mortality risk protection and, ultimately, to position us for further growth.”

Swiss Re Capital Markets acted as sole manager and book runner on the note issuance. Collateral for the Vita IV notes will initially consist of securities issued by the International Bank of Reconstruction and Development. Risk modelling and analysis was performed by Risk Management Solutions, the first time RMS has been involved in the Vita modelling process. Rating agency Standard & poor’s has rated the notes at BB+.

Swiss Re has a history of securitizing its life risks, obtaining over $1.4 billion in extreme mortality risk protection in its three predecessor Vita programmes.

Swiss Re said: “Notwithstanding the current media focus on the H1N1 virus, the Vita IV notes offering was a successful placement for Swiss Re.”

Christian Mumenthaler, Head of Swiss Re’s Life & Health business added: “This transaction is another example where we sustain our leadership in the life securitisations market.”