Catastrophe bond: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>P.F.cowdell@shu.ac.uk m (Categorise the page) |
imported>Doug Williamson m (Added 1 line space before see also) |
||
| Line 7: | Line 7: | ||
Also known as a Cat bond. | Also known as a Cat bond. | ||
== See also == | == See also == | ||
| Line 12: | Line 13: | ||
* [[ILS]] | * [[ILS]] | ||
[[Category: | [[Category:Long_term_funding]] | ||
[[Category: | [[Category:Manage_risks]] | ||
[[Category: | [[Category:Risk_frameworks]] | ||
Revision as of 09:17, 22 August 2014
A high-yield bond whose full payout is dependent on a given natural disaster not happening.
This has the effect of providing insurance-like financial protection to the bond issuer. If the particular catastrophe happens, the issuer pays less - or in the extreme case nothing at all - on the bond.
The investor enjoys a higher yield, in exchange for accepting the catastrophe risk effectively transferred from the issuer.
Also known as a Cat bond.
