A catastrophe modeler said today that the World Cup soccer eventhas proven the viability of using terrorism catastrophe bonds tohandle risk.

“It's a vindication,” said Gordon Woo, a catastrophist in theLondon office of Risk Management Solutions, which did a riskanalysis concerning the possibility of event cancellation due toterrorism for the F?d?ration Internationale de FootballAssociation.

The Golden Goal Finance Ltd. $260 million terrorism catastrophebond issue covering the cancellation of the FIFA World Cup wasoversubscribed when it was offered, he noted.

Among the factors taken into account in the analysis, said Mr.Woo, was the fact that soccer is extremely popular in the Arabworld. In fact, he said, there had been postings on a terroristJihad Web site complaining that “too many people were watchingsoccer to get on with militant activities.”

Mr. Woo also noted that there were a dozen soccer stadiumsavailable for use by FIFA in Germany, so that if one facility wasdamaged, “there was an element of redundancy” that would allow playto go on.

Mr. Woo's company said that “the pioneering terrorism riskcatastrophe bond stayed the tournament without incident, proving tobe successful for the risk analysis and the investors.”

RMS said that after doing its terrorism analysis for FIFA, itprovided the world football governing body with an elaborate eventtree model of potential terrorism-related pathways that would leadto something preventing completion of the FIFA World Cup.

The principles underlying the probabilistic risk analysis, RMSsaid, have been well upheld, as demonstrated, for example, by themilitary security for venues and teams commensurate with such highprofile international terrorist targets.

Although the German government provided security for thetournament, any decision on event cancellation rested solely withFIFA. There was no German government guarantee to investors, RMSexplained.

The company noted that when the 2002 FIFA World Cup took placein Korea and Japan within a year of 9/11 only an insurer of lastresort was prepared to provide terrorism coverage for theevent.

Soon afterwards, FIFA said it engaged bankers at CSFB to obtaincancellation risk coverage for the 2006 FIFA World Cup.

The price paid by FIFA for the $260 million issuance of GoldenGoal Finance Ltd. was lower than the least expensive insuranceoption, according to RMS.

RMS said it has performed provisional risk analyses for severaladditional terrorism risk securitizations as industry interest inthis option continues to grow.

“As with natural catastrophe bonds, the existence of thisalternative mode of risk transfer acts as a regulator on insurancemarket price increases,” observed Mr. Woo, who was chief architectfor the RMS FIFA Terrorism Risk Model.

“With the success of the first terrorism risk bond, and withcontinuing uncertainty over the future of TRIA after 2007, furtherinterest in terrorism alternative risk transfer is expected,” addedMr. Woo.