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EQECAT Provides Risk Analysis Support for the Largest
Cat Bond Deal to Date
August 20, 2003
(Oakland,
CA --) EQECAT, Inc, a division of ABSG Consulting, Houston,
Texas, today announced that it has provided the risk analysis
for a $470 million bond, the largest cat bond issued to
date based on total amount of risk transferred. The bond
was issued through Phoenix Quake Ltd, Phoenix Quake Wind,
Ltd, and Phoenix Quake Wind II, Ltd., which are special
purpose Cayman Islands companies established by Swiss Re
on behalf of Zenkyoren (Japanese National Mutual Insurance
Federation of Agricultural Cooperatives). The five-year
transaction, consisting of three individual tranches, covers
potential losses from second event occurrences of major
earthquakes and/or typhoons in Japan.
Rick
Clinton, EQECAT's president, indicated that EQECAT was
pleased to have provided Zenkyoren with the analytical
support for this significant transaction. This is the second
transaction to utilize "second generation parametric triggers" for
both wind and earthquake perils. Second generation parametric
triggers enable bond issuers to significantly improve risk
transfer efficiency, compared to traditional parametric
offerings. EQECAT worked closely with Zenkyoren to design
parametric indices that would be highly correlated to potential
insured losses in their portfolio.
Clinton
noted "the use of second generation parametric index loss
triggers enables issuers to transfer risk with lower basis
risk than with previous first generation parametric triggers
based on earthquake magnitude or storm track central pressure".
He added that "the advantage comes from selecting physical
severity parameters that correlate well with building damage
and that are measured at or near the location of the underlying
portfolio of insured risks." However, investors, relying
on credible independent scientific agencies, still achieve
high transparency and rapid loss determination.
EQECAT
is the leader in providing risk assessment services to
the insurance-linked capital markets, and has participated
in over $2.5 billion of transactions since 1997. EQECAT
has provided the risk assessment for 60% (by value) of
the property insurance linked securities outstanding at
year-end 2002, and is a major provider of global catastrophe
management software and services focusing on the property
and casualty insurance industry. ABSG Consulting provides
rational engineering-based solutions that blend state-of-the-art
technology with practical loss control measures and innovative
risk- transfer options.
For more information, contact:
Richard Clinton
President
1-510-817-3100 | rclinton@absconsulting.com
Dennis Kuzak
Senior Vice President
1-510-817-3100 | dkuzak@absconsulting.com
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