ZURICH (Bloomberg) — Swiss Reinsurance Co. said reinsurance taken out by primary insurers hurt by the financial crisis to bolster capital will jump this year to $10 billion, or about five percent of the industry's sales.

Swiss Re and Munich Re are among insurers that are competing for revenue from so-called capital-relief transactions as "there is substantial capital shortage, mostly in the life field, but also in non-life," Swiss Re chief economist Thomas Hess said in an interview in Zurich on May 25.

Sales of capital-relief deals, which cover potential losses that would otherwise have to be covered by insurers own capital, have jumped after the industry wrote down $243 billion in investment and credit losses worldwide amid the financial crisis. That compares with $127.8 billion in fresh capital they have raised in the same period, data compiled by Bloomberg show.

Demand last year was "probably close to zero", said Thomas Fossard, a Paris-based analyst with HSBC France. "Munich Re and Swiss Re signed the first deals in the first quarter this year."

Munich Re, the world's biggest reinsurer, said earlier this month it has closed nine capital-relief transactions in 2009, which may add more than 2 billion euros ($2.8 billion) to its gross premiums annually. Swiss Re declined to say how many such contracts it has written.

In February, Swiss Re, the second-largest reinsurer, was forced to turn to Warren Buffett for a 3 billion-Swiss franc ($2.6 billion) capital lifeline and replaced chief executive officer Jacques Aigrain after his strategy of trading securities led to a 1.75 billion-franc loss in the fourth quarter.

Reinsurance sales this year may grow between three percent and five percent globally, said Roland Pfaender, a Frankfurt-based analyst with Commerzbank AG. Reinsurance sales for life and non- life reinsurance combined was $200 billion in 2008, Swiss Re estimated.

Swiss Re has declined 28 percent this year in Zurich trading, giving the company a market value of 13.2 billion Swiss francs ($12.1 billion).