Aon Corp. announced that its investment banking group, Aon Capital Markets, has successfully completed the private placement of $260 million of principal at-risk variable rate notes for MIDORI Ltd. The placement provides Munich Re with fully collateralized catastrophe protection for Japanese earthquake risk.
“East Japan Railway Company is the ultimate beneficiary of the securitization through an underlying financial contract with Munich Re,” the bulletin explained. “The transaction was structured with a parametric trigger, providing recoveries based on the location and magnitude of the earthquakes in the Southern Kanto region of Japan, as reported by the Japanese Meteorological Agency (JMA).”
Aon Capital Markets President Paul Schultz described the transaction as combining reinsurance and capital markets expertise to “provide a unique capacity to our client.” He also noted Aon’s ability to offer its clients “alternative risk transfer solutions by providing access to traditional markets through Aon’s broker network and capital markets through Aon Capital Markets.”
The bulletin also stated: “The notes were issued by MIDORI Ltd., an exempted company in the Cayman Islands established for this transaction. EQECAT, Inc. provided the risk modeling and analysis for this transaction. The notes were priced at LIBOR plus 2.75 percent with a maturity of five years and rated BB+ by Standard & Poor’s.”
Source: Aon – www.aon.com