Cat Bonds

Cat bonds are hybrid insurance-debt instruments that turn disaster insurance into tradable securities.

• These bonds transfer risk from governments to global investors, tapping into deeper financial markets than traditional reinsurers.
• Quicker payouts and lower counter-party risk make cat bonds attractive for disaster relief and reconstruction.
• Sovereign nations sponsor cat bonds and pay premiums; the insured sum becomes the bond’s principal.
• Intermediaries like the World Bank, ADB, or reinsurers issue these bonds to minimize counter-party ....