FIFA said the move to securitization was made after it found insurers were not willing to underwrite cancellation coverage for the 2006 FIFA World Cup in Germany.

FIFA's World Cup match cancellation risk will be covered with a $260 million bond which covers only the cancellation of the 2006 final game for any acts, either manmade or natural, except world war and boycott.

FIFA said this is the first sporting event that has sought out the transfer of risk through the capital markets.

The transaction was structured by Credit Suisse First Boston on behalf of FIFA.

FIFA said in a statement that it made the move because the traditional market no longer covers the event as FIFA requires. It noted that the terror attack of Sept. 11, 2001, and the subsequent exit of traditional insurers from the 2002 FIFA World Cup cancellation insurance policy caused the association to turn to this risk transfer vehicle.

AXA Konzern in Cologne, Germany, cancelled its $851.8 million policy package with FIFA after 9/11 for the 2002 games.

Rogan Dwyer, president of Global Asset Protection, an insurance brokerage firm in Philadelphia, said he believes that when it comes to major sporting events, this trend will continue in the future. Because of the threat of terrorism, when it comes to large sporting events, there is simply not enough capacity to cover them.

"There is no amount of money in the world that will keep insurers comfortable with that amount of risk," he said, adding, "This is a big, big problem."

David Mair, the former risk manager for the U.S. Olympic Committee and former president of the New York-based Risk and Insurance Management Society, said FIFA's securitization is the leading edge of a trend by major sporting events to seek risk transfer through an alternative market approach.

The trend would not affect all sport events, he noted, because such U.S. games as American football and baseball have the ability to move games to other venues instead of having them cancelled.

Mr. Mair, who is now running his own consulting firm, Risk Excellence, based in Melbourne, Fla., noted that the cancellation insurance market has been constricting since the 1996 Olympic Games in Atlanta.

He said while FIFA probably could have secured a $260 million cancellation policy in the traditional market, the cost would have been greater.

When it comes to modeling for such an event, he said he was not sure if the models were clear for sports and that there is not yet enough experience to know if a model was valid. He pointed out, however, that the risk of terrorist attack for these large events was different because states that sponsor terrorism are participants in the games and would have a restraining influence on terrorist groups.

"They don't want to find themselves on the outside looking in," he said.

There is more concern about attacks from internal groups looking to embarrass their government, he noted.

Gordon Woo, chief architect of the terrorism risk model developed by Risk Management Solutions based in Newark, Calif., said his firm has developed a risk model that rating agencies have enough confidence in to rate the securitization bond in "A" and above grade.

Mr. Woo added that this is the first time a terror risk has been securitized and the model allowed for the successful release of the bond. He compared this to the securitization of earthquake risk in Japan a decade ago. What was new then is commonplace today. And he indicated that he felt the same could happen with such sports risks.

"One expects to see more [securitizations] like this in the months ahead," said Mr. Woo. "This is a landmark transaction."

An executive for an insurance brokerage firm that specializes in major sporting events, Bill Hubbard, chief executive officer for ASU International, based in Boston, said it remains to be seen how the capital markets will react if they sustain a large loss from this risk. He noted that at least with the traditional insurers the response to a loss is known. But he gave FIFA much credit for pursing the alternative market.

"Kudos to them [FIFA] for pulling this off," he said. "I am sure this was an immensely difficult undertaking. But I'm sure they would not have had the will to go through this if it were not for their experience with AXA."