Last week Goldman Sachs, Lehman Brothers and Merrill Lynch were marketing a three-year bullet maturity $100 million hurricane risk catastrophe bond issue for United States Automobile Association (USAA), a triple-A rated sponsor.

The Ba2/BB+ (MDY/S&P) transaction has a similar structure to last year's Residential Reinsurance 2001 Ltd Catastrophe Linked Notes. As with last year's deal, investors in Res Re 2002 provide reinsurance coverage for three years to USAA against hurricane losses in the East and Gulf coast states.However, this year's deal also provides coverage for USAA's book of business in Hawaii.

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