Catastrophe bond investors happy about Milton

posted 46 days ago by RainforestFrog 46 days ago by RainforestFrog +27 / -0

After fearing the worst from Hurricane Milton, investors in catastrophe bonds appear to have sustained losses well below those predicted as recently as Wednesday.

Overall, losses are now expected to be in the range of $20 billion to $60 billion, meaning cat-bond investors look to be facing a maximum hit of 4%. On Wednesday, before Milton landed, Icosa warned that a direct hit to Tampa threatened to cause insured losses anywhere from $40 billion to $150 billion, resulting in cat-bond losses of 2% to 15%.

Cat bonds have so far been spared major losses this season, thanks to carefully calibrated terms that mean investors are only called on to pay out if specific conditions are met.

https://gcaptain.com/insurance-companies-dodge-bullet-with-milton

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– RainforestFrog [S] 2 points 46 days ago +2 / -0

Same as it ever was. Same as it ever was. Same as it ever was. Same as it ever was.

Cui bono?

$425M in World Bank catastrophe bonds set to default if coronavirus declared a pandemic by June [26 Feb. 2020]

Investors betting big against catastrophic diseases are watching the World Health Organization closely as insurance bonds tied to whether the organization labels COVID-19 a pandemic are set to mature in June.

In 2017, the World Bank designed a new way to raise money: Pandemic Emergency Financing bonds. Over $425 million worth of such bonds, which bet against a global outbreak of infectious diseases and will default if WHO declares the coronavirus a pandemic, were sold by the World Bank in its first-ever issuance of catastrophe bonds. In the event of no pandemic, investors would be paid a healthy annualized return. Meanwhile, the World Bank could use the bonds to insure itself against the risk of a global outbreak.

“As an investor, we do not want to lose money,” said Chin Liu, a portfolio manager at Amundi Pioneer, a Boston-based firm that purchased the bonds as a way to diversify the company's $1 billion catastrophe fund. “But then, we also understand if it’s unfortunately triggered, it benefits every single person, including ourselves, to keep the virus controlled.”

https://archive.is/f2qzV

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– BurnNewHistoryBooks 1 point 45 days ago +1 / -0

This has Lucky Larry vibes.

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