FIFA to Issue Bond for World Cup Coverage

The world soccer governing body, FIFA, is preparing to issue a catastrophe bond for coverage of the 2006 World Cup in Germany. The bond will mean investors -- instead of insurance companies -- will shoulder the risk if the sporting event is canceled or postponed. Although such bonds usually cover natural disasters, like earthquakes or floods, they could play a bigger role in the future since insurance companies are increasingly unwilling to underwrite major sporting events, especially those held in multiple venues. Many insurers also no longer pay out if events are disrupted by factors such as terrorism. FIFA took out a catastrophe bond in 2002 when the French insurer Axa cancelled its coverage. The governing body had refused to renegotiate the terms of its policy in the wake of the September 11 attacks.