LONDON (Reuters) – Allstate, the largest publicly traded U.S home and auto insurer, has returned to the catastrophe bond market with a $250 million offering, five years after investors lost millions of dollars on a previous issue due to the collapse of Lehman Brothers.
The 2007 Willow Re bond – also for $250 million – was one of four so-called “cat bonds” that used Lehman Brothers as a swap counterparty, which meant it acted as a guarantor for the collateral backing the deal.
When Lehman failed in 2008, the notes became invalid and investors did not get their original investment back.
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