The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Insurance Securities: Cat breeders seek new varieties

As the fear of interest rate rises threatens virtually every market in the world ­ from sovereign bonds to high-tech stocks to emerging market securities ­ investors may no doubt be wondering where they can seek refuge.

Such an anxious environment may be the best thing to happen to catastrophe bonds, aka cat bonds. These structured financings, which transfer some of the catastrophic risk of property-casualty insurers to investors, have been struggling to get off the ground for the past several years. Investment bankers are trying to convince investors that, although cat bonds may be risky, such risks have nothing to do with interest rates and are thus not correlated with other financial assets. Bankers hope eventually the market will be akin to mortgage-backed or other asset-backed securities.

While most of the work on cat bonds has been done in the US, it was in Zürich last month that the largest, and first, public cat transaction was offered. Credit Suisse First Boston (CSFB) arranged the three-year Sfr400 million ($281.7 million) subordinated convertible bond for Winterthur Insurance, which was based on the risk of hailstorm damage to automobiles. The deal was sold to retail investors and trades on the Zürich Stock Exchange.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree