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Orrick, Herrington & Sutcliffe public finance partner Mary Collins had long considered workers’ compensation to be a relatively sleepy part of the law — that is, until last year, when a bond offering she handled for the California Insurance Guarantee Association, a quasigovernmental body established to pay claims of insolvent insurance carriers, turned into one of the most complicated deals of her career. The offering brought a whole new type of credit security — a special assessment, or surcharge, on workers’ compensation premiums — into the marketplace. When CIGA came to Collins in 2003, it was in trouble. Since late 2000, 26 of the state’s workers’ compensation insurers had become insolvent, straining CIGA’s resources. The agency was losing about $50 million a month. As a short-term solution, CIGA had borrowed from its other funds, but if it didn’t get a cash infusion soon, it would not be able to meet its claims. CIGA executive director Lawrence Mulryan turned to the markets. In May 2003 he contacted Collins, and asked her to draft legislation that would authorize the issuance of $1.5 billion worth of bonds. The legislation gave CIGA the ability to repay the bonds by placing surcharges on workers’ compensation insurance charges. (This surcharge is paid by each company that purchases a workers’ compensation policy for its employees.) While it’s not uncommon for bond lawyers to draft legislation, the CIGA legislation had no precedent. “I drew from a lot of different models and types of issues,” Collins says. “In some ways I could draw parallels from general obligation bond structures, sales tax collections and loan agreement structures.” Creating the new type of security was a first for Collins, a partner at Orrick since 1988. But she’d had plenty of experience in public finance. In 2001 she represented the San Francisco Bay Area Rapid Transit District in securing bond financing to extend its subway line. A year later, she drafted legislation for the issuance of “earthquake bonds,” which were intended to aid insurers made insolvent by earthquake claims. The legislation was approved, but the bonds were never issued. That experience was crucial because CIGA had never issued bonds before this offering, says Lamont Financial Services Corporation Senior Vice President Thomas Dunphy, who acted as CIGA’s financial adviser. “Mary doesn’t get rattled, like we tend to,” Dunphy says. “She was like Steady Eddie.” Read the full dealmaker profile and the complete corporate scorecard by subscribing to The American Lawyer.

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