FM Global Utilizes a US$300 Million Catastrophe Bond

Business Wire, June 7, 2005

JOHNSTON, R.I. -- Commercial and industrial property insurer FM Global has announced the private placement of a US$300 million catastrophe bond to protect against the consequences of unusual earthquake activity in the Pacific Northwest region of the United States and Canada. The transaction is the first of its kind for FM Global.

"This catastrophe bond is a cost-effective, conservative and highly secure transaction that protects FM Global's balance sheet and provides our policyholders with added financial protection," said Jeff Burchill, chief financial officer, FM Global.

According to Burchill, FM Global's scientists have validated recent consensus from the scientific community that, approximately once every 500 years, an earthquake along the Cascadia Subduction Zone could release significantly more energy than previously understood. The fault extends from southern British Columbia in Canada to northern California.

Goldman Sachs, a leading investment banking, securities and investment management firm, served as lead manager to place the catastrophe bond.

FM Global is a mutual commercial and industrial property insurance organization with a unique risk management focus. For 170 years, leading corporations around the world have benefited from FM Global's superior insurance capacity, risk assessment services and proven property loss prevention engineering expertise and research. FM Global helps its clients better understand the nature of their risks and develop sound property loss prevention solutions that can effectively improve their risk profile. Headquartered in Johnston, Rhode Island, USA, with offices worldwide, FM Global is rated A (Superior) by A.M. Best and AA- (Very Strong) by Fitch.