Risk Management Solutions (RMS), a provider of products and services for the management of catastrophe risk, recently performed the risk analysis for the securitization covering cancellation of the 18th FIFA World Cup, scheduled to be held in the summer of 2006 in Germany.
The RMS analysis examined the threat and impact of terrorism events and natural disasters on the 64-match FIFA World Cup final competition. The innovative securitization, Golden Goal Finance Ltd, is the first to cover terrorism risk, as well as the first to cover risk to a sports event.
The $260 million transaction was structured by CSFB on behalf of the Fédération Internationale de Football Association (FIFA), the world football governing body, which is based in Zurich. The securitization provides for capital markets coverage of revenue lost to FIFA in the event of incompletion of the event. The bond has achieved an investment grade rating of A3 from Moody’s Investors Service.
“This securitization demonstrates that terrorism risk can be effectively quantified for investment purposes,” said Gordon Woo, chief architect of the RMS Terrorism Risk Model. “It also shows that the capital markets are willing to provide alternative financial coverage for terrorism events.”
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