RNK Capital and Swiss Re Structure First Insurance Product for CDM Carbon Credit Transactions

13 June 2006, Zurich

Insurance Instrument Mitigates Kyoto-Related Transaction Risk for Global Carbon Credit Trading.

RNK Capital LLC (RNK), a New York-based private investment firm specializing in the U.S. and international environmental markets, and Swiss Re, the world's leading and most diversified global reinsurer, today announce they have jointly implemented the carbon markets' first insurance product for managing Kyoto Protocol-related risk in carbon credit transactions. The insurance product enables RNK to mitigate a key risk factor in carbon credit transactions and enhance the value of RNK's carbon credits portfolio.

The insurance product, which was developed by Swiss Re and RNK, covers Kyoto-related risk to carbon credit purchases by RNK. The policy, issued by Swiss Re subsidiary European International Reinsurance Ltd., provides coverage for the risks related to Clean Development Mechanism (CDM) project registration and the issuance of Certified Emission Reductions (CERs) under the Kyoto Protocol's CDM. These risks include the failure or delay in the approval, certification and/or issuance of CERs from CDM projects by United Nation Framework Convention on Climate Change (UNFCCC).

"RNK Capital invests in CDM and Joint Implementation projects that other investors will not consider due to project and system risks that cannot be efficiently spread to the market," said Robert Koltun, portfolio manager and managing member. "Swiss Re's coverage of project registration and issuance risks complements RNK Capital's ability to assess, value and invest in climate change projects. Kyoto-related risk is the only part of the risk equation we were previously unable to mitigate or manage. This insurance policy allows RNK to invest in carbon emissions reduction projects at an even earlier stage of the process, and to commit a greater share of fund resources."

Industrialized countries who have commitments under the Kyoto Protocol to reduce emissions causing greenhouse gases may use the CDM- to invest in projects in developing nations that reduce global emissions as well as provide economic and social benefits to the host country. In order to receive carbon credits that can be used by regulated entities for compliance with national and regional programs in Europe, Japan and Canada, project investors must submit their projects to a rigorous review and certification process. The UNFCCC administers an executive body to certify these emissions reduction project activities, which creates a tradable commodity that can then be used in the international emissions trading scheme.

Participants in the early stage of project development face the uncertainty that potential emission reduction credit from CDM projects may not be certified for use under the Kyoto Protocol – a risk that the carbon insurance policy will remedy.
"With this product, investors and carbon offtakers are enabled to transfer well-defined risks to Swiss Re, thereby fostering investments and confidence in the Carbon market," said Ben Lashkari, Head of Emissions at Swiss Re's Environmental and Commodity Markets.

"RNK Capital has employed the policy for projects in which we are invested and intends to continue doing so," said Mr. Koltun. "The policy concerns an important risk factor, and employing it with specific projects in our portfolio considerably enhances the value of our carbon credits."

"Providing structured insurance and financial products for this class of risk is significant because it validates the market-based approach to reducing greenhouse gas emissions and in tackling climate change," said Mr. Lashkari.

About RNK Capital LLC

Formed in February 2004, RNK Capital is an international investment firm that invests in environmental assets by targeting environmental and emissions markets worldwide. RNK Capital also provides direct investments into project activities that generate environmental market products and commodities. RNK Capital is a specialist in structured and managed transactions for the global carbon markets, and a leading investor in early stage environmental compliance projects. RNK Capital maintains a portfolio of environmental products in the global carbon, North American criteria pollutant (SO2 and NOx allowances), RPS driven REC, European ETS, and regional pollutants markets, as well as many other environmental attributes.

About Swiss Re

Swiss Re is the world's leading and most diversified global reinsurer. The company operates through offices in over 30 countries. Founded in Zurich, Switzerland, in 1863, Swiss Re offers financial services products that enable risk-taking essential to enterprise and progress. The company's traditional reinsurance products and related services for property and casualty, as well as the life and health business are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated "AA" by Standard & Poor's, "Aa2" by Moody's and "A+" by A.M. Best.