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$300M Nakama Re cat bond covers Japan quake risk

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$300M Nakama Re cat bond covers Japan quake risk

Aon Benfield Securities, the investment banking division of global reinsurance intermediary and capital adviser Aon Benfield, said Monday that it has completed the offering of $300 million of principal at-risk variable-rate notes for Nakama Re Ltd.

The offering provides Tokio-based Zenkyoren Ltd. — Japan's National Mutual Insurance Federation of Agricultural Cooperatives — with collateralized catastrophe protection for Japan earthquake risk.

Nakama Re was structured to provide indemnity coverage and marks the first time Zenkyoren has sponsored a catastrophe bond directly, according to Aon Benfield.

The notes were issued by Nakama Re, an exempted company in Bermuda that was established for the deal. Boston-based AIR Worldwide Corp. provided risk modeling and analysis for this transaction. The notes were priced at 2.75% above money market return and have a maturity of three years.

“We are very pleased with the successful completion of the catastrophe bond issuance by Nakama Re Ltd,” Yoichi Azuma, general manager of reinsurance office at Zenkyoren, said in a statement. “We would like to consider utilizing the capacity from the catastrophe bond market continuously to expand our reinsurance program in a sustainable way.”

“The offering by Nakama Re Ltd. was very well-received by investors, demonstrating the importance of diversifying perils to the market, as well as the continuing development of non-U.S. indemnity structures in the catastrophe bond market,” Aon Benfield Securities CEO Paul Schultz said in the statement.