Honolulu real estate investor Jay Shidler has his name on companies, the University of Hawai'i-Manoa's business college and now a patent.

Shidler last week was awarded U.S. Patent No. 7,333,950 for a system of creating, pricing and trading of sophisticated financial instruments such as credit-default swaps.

"I'm going to have to frame this," quipped Shidler, who said he was pleased he finally got the patent, applied for in 2001.

The patent was a first for Shidler, who is one of Honolulu's most successful real estate investors, and more recently, a noteworthy contributor to the University of Hawai'i.

Although he tries to keep a low profile, Shidler in 2006 made headlines locally when he donated $25 million to UH to help transform the Manoa business school into one of the top public university programs in coming years.

Shidler started a career in real estate before graduating from UH and going on to invest in commercial real estate across the country.

Shidler said the patent is an outgrowth of extensive financial modeling work done in Honolulu more than a decade ago as he and others explored a complex area of finance known as credit risk transfer.

"We were developing the theory that would give rise to a new type of company that had never existed before in the relatively esoteric world of derivatives," Shidler said. "Basically, this is that nexus in which business or finance meets STEM (science, technology, engineering and math)."

The best of the financial models were packaged for the patent filing and Shidler, along with former bankers at Salomon Smith Barney, Merrill Lynch & Co. and Bank of America, founded Primus Guaranty, a company now traded on the New York Stock Exchange.

Primus Guaranty primarily operates in the area of credit-default swaps, a financial instrument that in simplified terms is like insurance for bonds and other credit products. The company is paid a fee in exchange for agreeing to cover losses on securities in the case of a default.

Shidler and the eight others who received the patent worked on formulas and complex probability models that helped determine the risks involved with a particular security.

Shidler made the point of noting that a lot of the theory work for Primus' pricing models was done in Honolulu.

Honolulu is "a very viable place to do business," Shidler said. "I'm pleased we got this."

Reach Greg Wiles at gwiles@honoluluadvertiser.com.