Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Domestic Inc.

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Domestic Inc. – At a glance:

  • Issuer: Domestic Inc.
  • Cedent / sponsor: Kemper
  • Placement / structuring agent/s: AON Capital Markets, INEX
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: U.S. earthquake risks
  • Size: $100m
  • Trigger type: Indemnity
  • Ratings: S&P: 'BB+'
  • Date of issue: Mar 1999

Domestic Inc. – Full details:

Insurance linked security providing cover for mid-west and New Madrid fault earthquakes. Triggered when Kempers losses exceed certain level.

The floating rate notes have been rated BB+ by Standar & Poors.

Kemper Insurance issued $100 million of three-year catastrophe bond notes through a U.S. domiciled special-purpose vehicle Domestic Inc.

The offering marks the first time that a cat bond has been issued inside the U.S., which may explain why the deal was heavily oversubscribed and priced at the tight end of market talk, according to David Reilly, a director at Aon Capital Markets in Chicago, which solely underwrote the offering.

The deal was sold to 30 institutional investors, some of which may have been unwilling to buy a non-U.S. issue

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