MUTEKI CAT BOND DOWNGRADED ON LOSS EXPECTATION

Rating agency Moody's has downgraded Muteki Ltd. on the belief that the £300m catastrophe bond will be triggered by the Japanese earthquake. Moody's expects investors in the bond will experience a total loss of principle. Muteki provides Munich Re with cover for certain reinsurance contracts entered into with Zenkyoren, the National Mutual Insurance Federation of Agricultural Cooperatives of Japan. Moody's has studied seismic data from the Kyoshin K-Net earthquake data network and estimated the parametric index value for the Japanese earthquake. Based on Moody's calculation, they expect that losses to Muteki will breach the attachment level and reach the exhaustion level, resulting in a total loss of principal to the Class A bondholders. Earlier media reports said that some K-Net stations were damaged by the earthquake and Tsunami, but the latest estimation uses data from 693 out of the roughly 1,200 recording stations in Japan.