Another First for EQECAT in Securitization.OAKLAND, Calif.--(BUSINESS WIRE)--Dec. 8, 1999-- EQECAT, Inc., a subsidiary of EQE EQE Equivalent Quantum Efficiency EQE Environmental Quality Evaluation International Inc., continues to be the leader in technical innovation for insurance linked catastrophe bonds. EQECAT's expertise and software models supported the first ever earthquake securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. for the SR Earthquake Fund, the first ever catastrophe bond using a physical loss trigger for Parametric Re, and the first ever catastrophic risk securitization for a non-insurer company, Oriental Land Co. Ltd. Today, EQECAT is pleased to announce another first: EQECAT provided the risk modeling and analytical services for the first modeled based transaction incorporating recorded earthquake ground motion data. The analysis and transaction support was provided to Gerling-Konzern Globale Ruckerversicherungs-Aktiengesellschaft (GKG GKG Gabah Kering Giling ), who placed a $100 million, 5 year, bond transaction which provided Gerling with protection against Japanese earthquake-related losses. The notes effectively reinsure re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. Gerling and provide them with substantial flexibility in their reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. structure. According to Dr. James J. Johnson, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , EQECAT, "The transaction is innovative in several respects which provide several advantages to Gerling. A notional portfolio was used to determine modeled losses for the bond structure and payout determination. The notional portfolio may be updated at six month intervals, holding the attachment probability and expected annual loss fixed, giving Gerling substantial flexibility in minimizing their basis risk while growing their Japanese earthquake business. "The notional portfolio concept, also, permits Gerling to receive a prompt payout if the loss conditions are met. Finally, determining losses to the notional portfolio and subsequent payouts are based on recorded ground motions from earthquake events which, also, minimizes Gerling's basis risk." Johnson went on to say that this structure fits between a parametric trigger and a full indemnity transaction and he fully expects additional transactions of this type to be developed. The transaction was structured by Aon Capital Markets, and underwritten by Aon Capital Markets, lead manager, and by Goldman, Sachs & Co. co-lead manager. Lehman Bros BROS Brothers BROS Benefits and Retirement Operations Section (King County, Washington) BROS Barnes and Richmond Operatic Society (London, UK) . was a selling group Selling Group All financial institutions involved in selling or marketing a new issue of debt or equity but not necessarily participating in the underwriting consortium. Notes: member. Gerling Global Financial Products acted as a reinsurance intermediary. The notes were rated by Standard and Poors and Duff & Phelps and were issued by Namazu Re, Ltd., a Cayman Islands-based reinsurance company established for this transaction. EQE International specializes in providing information, software and engineering consulting services for the assessment and management of risk. EQECAT is a leading developer of catastrophe software models and is a consultant to the property/casualty and financial services industries. EQE and EQECAT are headquartered in Oakland and have more than 550 employees worldwide. |
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