S&P Confirms Earthquake Didn’t Trigger Japanese Cat Bonds

While the earthquake which struck Western Japan last week was very strong, measuring 7.3 on the Japanese Meteorological Agency scale, it was extremely deep, and the epicenter was far from a major population center – A set of circumstances that avoided possibly catastrophic losses.

Following an extensive assessment of damages by earthquake consultants from Oakland based EQE International, Standard & Poor’s rating agency affirmed that “some $300 million in parametric earthquake bonds were unaffected, as their payouts are determined formulaically based on quake location and magnitude. These include notes issued by Parametric Re on behalf of Tokio Marine & Fire insurance Co. Ltd., and by Concentric Ltd. and Circle Maihama Ltd. on behalf of Oriental Land, the operator of Tokyo Disneyland.”

“Another $300 million in catastrophe bonds that depend on earthquake insurance losses in Tokyo, Nagoya, or Osaka appear unlikely to be affected by the quake because of the distance from their major insurance exposures,” the announcement continued. These include $100 million in notes issued by Namazu Re Ltd. on behalf of Germany’s Gerling Global Reinsurance Corp., and $200 million in notes issued by Atlas Reinsurance Corp. on behalf of France’s SCOR.