White & Case LLP - News - White & Case Advises Mexico on Innovative Catastrophe Bonds Issue

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White & Case Advises Mexico on Innovative Catastrophe Bonds Issue

New York, Mexico City, Monterrey, May 16, 2006 ... Global law firm White & Case announced today it advised the Government of Mexico in connection with the sale of "catastrophe" bonds, marking the first time that a sovereign in Latin America has been a prime beneficiary of this type of security.

A special purpose vehicle set up by the European Finance Reinsurance Company Ltd., a subsidiary of Swiss Reinsurance Co., issued $160 million of the catastrophe bonds to help the Mexican government fund responsive measures in the event of a major earthquake in several regions of Mexico over the next three years.

The bonds, which mature in 2009, were sold to institutional investors in the US and Europe in a sale managed by Deutsche Bank Securities, Inc. and Swiss Re Capital Markets Corp. The securities are part of Mexico's $450 million, three-year insurance arrangement with Swiss Reinsurance Co.

"With this transaction, Mexico takes the bold step of being the first Latin American government to take part in the issue of this relatively new type of security," said Howard Kleinman, a partner in the capital markets practice at White & Case in New York. "The Government decided that these bonds, in conjunction with its broader insurance agreement, would provide a highly effective way to help defray costs of remedial action after an earthquake, such as the devastating 1985 quake that resulted in approximately 10,000 casualties and millions of dollars in damages."

Mexico, which announced the bond sale on Friday, has frequently been subject to quakes and more are expected in coming years.

Since catastrophe bonds were introduced in the 1990s, they have been issued in the US, Japan and European Union to defray the cost of hurricanes, earthquakes and other disasters. Catastrophe bond payments are triggered by a specified event. Under the terms of the bond, the Government will be relieved of payment of the principal and interest payments on the notes if an earthquake of at least a 7.5 magnitude strikes in certain areas, including near Mexico City, over the next three years.

"This was a multi-jurisdictional securities issuance and also a hybrid with an insurance policy, and it has been a strong success with investors," notes Kleinman. "It's very likely that other governments will follow Mexico's lead."

In addition to Kleinman, White & Case drew on experience from both its New York and Mexico City offices, including partners Rodrigo Orozco and David Koschik, counsel Richard Liskov, and associates Eduardo Flores-Herrera and Terry O'Brien.

About White & Case
White & Case LLP is a leading global law firm with nearly 2,000 lawyers in 36 offices in 24 countries. Our clients value the breadth and depth of our US, English and local law capabilities and rely on us for their complex cross-border commercial and financial transactions and for international arbitration and litigation. Whether in established or emerging markets, the hallmark of White & Case is our complete dedication to the business priorities and legal needs of our clients.

Contact:
Josh Karlen
Media Relations Manager
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036-2787
212 819 8519

	Press Releases
Expertise Capital Markets Latin America Lawyers Rodrigo Orozco Waters Eduardo Flores-Herrera Locations New York Mexico City Monterrey	White & Case Advises Mexico on Innovative Catastrophe Bonds Issue New York, Mexico City, Monterrey, May 16, 2006 ... Global law firm White & Case announced today it advised the Government of Mexico in connection with the sale of "catastrophe" bonds, marking the first time that a sovereign in Latin America has been a prime beneficiary of this type of security. A special purpose vehicle set up by the European Finance Reinsurance Company Ltd., a subsidiary of Swiss Reinsurance Co., issued $160 million of the catastrophe bonds to help the Mexican government fund responsive measures in the event of a major earthquake in several regions of Mexico over the next three years. The bonds, which mature in 2009, were sold to institutional investors in the US and Europe in a sale managed by Deutsche Bank Securities, Inc. and Swiss Re Capital Markets Corp. The securities are part of Mexico's $450 million, three-year insurance arrangement with Swiss Reinsurance Co. "With this transaction, Mexico takes the bold step of being the first Latin American government to take part in the issue of this relatively new type of security," said Howard Kleinman, a partner in the capital markets practice at White & Case in New York. "The Government decided that these bonds, in conjunction with its broader insurance agreement, would provide a highly effective way to help defray costs of remedial action after an earthquake, such as the devastating 1985 quake that resulted in approximately 10,000 casualties and millions of dollars in damages." Mexico, which announced the bond sale on Friday, has frequently been subject to quakes and more are expected in coming years. Since catastrophe bonds were introduced in the 1990s, they have been issued in the US, Japan and European Union to defray the cost of hurricanes, earthquakes and other disasters. Catastrophe bond payments are triggered by a specified event. Under the terms of the bond, the Government will be relieved of payment of the principal and interest payments on the notes if an earthquake of at least a 7.5 magnitude strikes in certain areas, including near Mexico City, over the next three years. "This was a multi-jurisdictional securities issuance and also a hybrid with an insurance policy, and it has been a strong success with investors," notes Kleinman. "It's very likely that other governments will follow Mexico's lead." In addition to Kleinman, White & Case drew on experience from both its New York and Mexico City offices, including partners Rodrigo Orozco and David Koschik, counsel Richard Liskov, and associates Eduardo Flores-Herrera and Terry O'Brien. About White & Case White & Case LLP is a leading global law firm with nearly 2,000 lawyers in 36 offices in 24 countries. Our clients value the breadth and depth of our US, English and local law capabilities and rely on us for their complex cross-border commercial and financial transactions and for international arbitration and litigation. Whether in established or emerging markets, the hallmark of White & Case is our complete dedication to the business priorities and legal needs of our clients. Contact: Josh Karlen Media Relations Manager White & Case LLP 1155 Avenue of the Americas New York, NY 10036-2787 212 819 8519