USAA and the Magnificent Seven

August 31,2003. By Morton N. Lane, Ph.D. In 1997 USAA – assisted by its investment bankers, Goldman Sachs, Merrill Lynch and Lehman Bros - stunned the nascent world of insurance securitization with it’s sponsorship of Residential Re and a near-$500 million securities issue. Since that date USAA has sponsored a new security every year, including this year’s Residential Re 2003 Ltd [Res Re 2003] bringing its total issues to seven – the magnificent seven. To read the full version of this article with graphs: Download the PDF Here

 

An Optionable Note

April 15, 1999, The Reliance III Case Study Morton Lane, Ph.D. At the beginning of 1998, Reliance National purchased an option from investors to issue a pre-specified insurance-linked note, at Reliance’s sole discretion, anytime during 1998, 1999 or 2000.  It was the first “Optionable Note” in the growing market of insurance-linked securitizations.  Two other optionable securities have been issued subsequently:  (1) by Aon on behalf of Yasuda Fire and Marine (where the option was embedded in a bond); (2) by Goldman Sachs on behalf of Allianz, which used a structure very similar to that of the Reliance optionable transaction.  It is likely that such structures will be even more popular in the future. To read the full version of this article with graphs: Download the PDF Here