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USAA, the US's biggest direct home and car insurance company, is planning an unusual sale of $500 million in bonds on the capital markets. The bonds would be tied to the company's hurricane losses. Holders would have to surrender their principal if USAA is forced to cover more than US$1 billion in claims caused by any single hurricane in the next year. In return, they will receive a risk premium on top of the normal bond market return.

In a market formerly dominated by only one practice area, privatization, lawyers are enjoying the opportunity to offer more general corporate advice. However, this is putting weaker firms under pressure and leading to consolidation. Paul Lee reports

US firm Morgan, Lewis & Bockius may be planning an office in the Russian federation. The firm recently entered into a mutual referral agreement with Rothstein & Shaw, which has offices in Moscow and Almaty, Kazakhstan. Rothstein & Shaw's practice is focused in the areas of corporate and commercial law, securities, real estate and joint ventures. In return, Morgan Lewis has the expertise of its Russian and CIS practice group, which was recently strengthened by four lawyers who joined from Coudert Brothers. Partners Jake Redway and Jan DuBois have experience in providing advice to clients on transactions in the Russian Federation and are supported by associates Adam Deery and Michael Pekowsky. Pekowsky will be resident in the Moscow office of Rothstein & Shaw.

US firm Dewey Ballantine and the UK's Theodore Goddard have broken up their four-office joint venture in central and eastern Europe, with Dewey buying Theodore out. The divorce of the former partners follows the split in the firms' London office when Dewey announced plans for a fully independent office (see International Financial Law Review, June 1996, page 4).

France has introduced new pledging and netting provisions which will be welcomed by participants in structured financings and derivatives deals. By Stéphane Mouy of Banque Paribas and Edward Nalbantian of Watson, Farley & Williams, Paris

Since the establishment of the official Cyprus Stock Exchange in March 1996, large financial institutions have launched investment funds whose public offerings were oversubscribed almost by a factor of eight.

UK firm Ashurst Morris Crisp is opening an office in Singapore. Headed by corporate partner Richard Gubbins and project finance partner Scott Brodsky, it will concentrate on international transactions and project finance. Three associates, Clive Tucker, Shaun Lascelles and Tom Whelan, will also be based in the office, opening in October.

Southern England utility Southern Water was the object of rival bids from UK utilities ScottishPower and Southern Electric. ScottishPower made a £1.56 billion (US$2.36 billion) hostile takover bid which was followed by an agreed cash and shares offer of £1.6 billion from rival Southern Electric. ScottishPower's subsequent offer of £1.67 billion went wholly unconditional on August 7.

Australian firm Feez Ruthning, Brisbane, is to merge with Allen Allen Hemsley in Sydney. Both firms are part of the Allens Arthur Robinson Group, share clients and have a tradition of working closely together. Managing partner of Feez Ruthning, Howard Stack, says: "It was a hard commercial decision, but this way we will provide a seamless provision of services." The merger will add 30 partners to Allen Allen Hemsley's 60 partners in Sydney and will mean the firm has 440 lawyers altogether. Stack says: "I've been spelling out the name for 27 years -- I won't be sorry to stop that."

Despite the loss of partners to Morgan Lewis, Coudert Brothers is pressing ahead with its office in St Petersburg, headed by Marian Hagler, a senior associate from the Moscow office. The office will be staffed by Hagler and a Russian associate, and will advise US companies investing in the St Petersburg region, particularly in joint ventures, privatizations and real estate transactions. Partner supervision will be from Moscow and New York.