J.P. Morgan & Co. and SunTrust Capital Markets have completed syndication of a $1.5 billion line of credit for the Florida Residential Joint Underwriting Association.

The association was created in 1992 in response to the disruption Hurricane Andrew caused in the Florida insurance market.

The line of credit will protect the association, which serves 780,000 policyholders, against catastrophic losses, said Bill Nelson, Florida's state treasurer and insurance commissioner.

The loan is the second and larger of two recent deals supporting hurricane insurers to close within the last month. The other was a $1 billion Chase Manhattan-led loan to the Florida Windstorm Underwriters Association.

Bank loans as a financial defense against natural disasters are relatively new. The method was pioneered last year by Chase in a $500 million loan for the Hawaii Hurricane Relief Fund.

Although the loans themselves are new, the concept is familiar.

"It looks like these deals are risk pools which are structured as a bank loan," said a loan syndicator. "As long as you can analyze risk, it makes sense."

"It's not really conceptually different than some of the receivables deals we do for our customers," said the banker.

Another syndicator said the credits are ultimately backed by the assessments against the insurance companies writing homeowners insurance in Florida.

The biggest difference between catastrophe loans and others, said the lender, is the amount of political haggling involved, since the state insurance commissioner plays an active part in the process.

A group of 15 international and domestic banks supported the most recent insurance deal.

With the solid backing of insurance companies in Florida, one banker said the deal looked attractive.

Commitments on the new deal ranged from $25 million to $200 million.

The deal is structured as a two-and-a-half-year nonrevolving credit.

Each time the association draws on the loan, the drawn portion becomes a four-and-a-half-year term loan.

The six managing agent banks on the deal were: Dai Ichi Kangyo Bank, Industrial Bank of Japan, Societe Generale, Toronto-Dominion Bank, Sumitomo Bank, and Union Bank of Switzerland.

The lenders on the deal were: Bank of Montreal, Credit Lyonnais, Fuji Bank, Bank of America, Banc Nationale de Paris, First Union, Kredit Bank, Sanwa, and SouthTrust.

Market sources said the floating rate on the loan starts at the London interbank offered rate plus 125 basis points and is capped at 175 basis points over Libor.

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