Zurich Financial Services Group announced that it has obtained, through its subsidiaries Zurich American Insurance Company and Zurich Insurance Company, a 3-year $225 million catastrophe excess of loss reinsurance protection from Lakeside Re II to cover the risk of earthquakes in California.

This reinsurance transaction is a replacement of the expiring 2006 Lakeside Re transaction.

The reinsurance transaction with Lakeside II, a special purpose reinsurance company domiciled in the Cayman Islands, will see Zurich receive up to $225 million in payment of losses in the event of one or more California earthquakes during the 3-year period. Lakeside II, in turn, has issued to the capital markets principal at-risk variable rate notes linked to this risk. The catastrophe bond has a floating coupon consisting of a fixed 7.75% plus a variable investment yield received by Lakeside II on the underlying assets. The offering was oversubscribed.