Aon completes Japanese quake bond

Asia

Aon Re Global’s investment banking group, Aon Capital Markets, has completed the private placement of US$300mn of principal at-risk variable rate notes, its second Japanese earthquake securitization since the last quarter of 2007. The placement provides Munich Re with fully collateralized catastrophe protection for Japanese earthquake risk. Zenkyoren, the National Mutual Insurance Federation of Agricultural Cooperatives, is the ultimate beneficiary of the securitization through an underlying reinsurance contract with Munich Re. The transaction was structured with a parametric index trigger, providing recoveries based on the location and peak ground acceleration of earthquakes as reported by strong motion seismographs. “The capital markets continue to offer our clients cost effective capacity that complements traditional reinsurance and large buyers of catastrophe reinsurance worldwide are utilizing this source of capital,” said Paul Schultz, president of Aon Capital Markets. The notes were issued by Muteki Ltd, an exempted company in the Cayman Islands established for the transaction.