Concentric Ltd. – Full details:
The Concentric Ltd. catastrophe bond provided Oriental Land Co., the owner of Disneyland Tokyo, with coverage for Tokyo area earthquakes on a parametric trigger basis.
$100 million of floating rate notes were issued and sold to investors to provide this coverage.
The Concentric Ltd. catastrophe bond featured a parametric trigger based on three concentric bands surrounding Disneyland Tokyo.
The cat bond would have been triggered if an earthquake occurred in the inner circle measuring 6.5 or more on the JMA scale, or 7.1 in the middle ring or 7.6 in the outer ring.
The motivation behind this catastrophe bond was to provide capital to Oriental Land contingent on a major earthquake occurring that would have closed down the theme park for months, or even years.
As a result, it wasn’t just the physical damage that was being insured, but also the expected business interruption cost and loss of earnings that would have occurred after a major Tokyo earthquake with an epicentre near to Tokyo Disneyland.
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