BNP Paribas and Aon Benfield place bond at double planned size

Hannover Re has renewed a cat bond issued in July 2006, via BNP Paribas and Aon Benfield Securities. The EUR150m was placed with institutional investors in Europe and North America. The notes were priced at EURIBOR plus 6.75 percent. They mature on 6 April 2012.

"We are pleased that we succeeded in structuring an attractive transaction that met with keen interest among investors. We were able to place twice the originally planned amount of EUR75m at our preferred conditions", said Ulrich Wallin, chief executive officer of Hannover Re.

The bond, called Eurus II, provides cover from 30 July 2009 to 31 March 2012 against severe windstorm events in seven European countries (Belgium, Denmark, Germany, France, United Kingdom, Ireland, Netherlands). The performance of the bonds is linked to a wind speed index.

"This transaction strengthens our risk management and protects our capital against events with a return probability of between 50 and 80 years. We thus continue to be able to provide windstorm protection for our European clients", said Wallin.

A preliminary rating of "BB" was given by the ratings agency Standard & Poor's. AIR Worldwide Corporation handled the modelling of the underlying risks.

The transaction was arranged by BNP Paribas and Aon Benfield Securities. BNP Paribas is guaranteeing the minimum return on the portfolio and offseting any fluctuations in value on a daily basis. The investors' paid-in capital is put into corporate and government bonds.