CHICAGO, Oct. 17 /PRNewswire-FirstCall/ -- Aon Corporation today announced that its investment banking group, Aon Capital Markets, 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.
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East Japan Railway Company is the ultimate beneficiary of the securitization through an underlying financial contract with Munich Re. 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 was the sole book runner and an Initial Purchaser for the Rule 144A transaction.
"This transaction has combined reinsurance and capital markets to provide a unique capacity to our client," said Paul Schultz, president of Aon Capital Markets. "Aon's dynamic execution platform offers our clients alternative risk transfer solutions by providing access to traditional markets through Aon's broker network and capital markets through Aon Capital Markets."
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% with a maturity of five years and rated BB+ by Standard & Poor's.
"The deal was well received by investors," said Schultz. "The diversified peril and simple parametric structure was very appealing to investors."
About Aon
Aon Capital Markets is Aon's boutique investment bank, providing clients with strategic advice and access to all forms of capital. Aon Capital Markets was one of the primary innovators of insurance-linked securities and recently completed the largest insurance-linked securitization in history. Since bringing the first ILS deal to the market in 1994, Aon Capital Markets has brought more than 50 deals to market.
Aon Corporation is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. Through its 43,000 professionals worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was ranked by A.M. Best as the number one global insurance brokerage in 2007 based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/.
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