Catastrophic bonds financial definition of Catastrophic bonds. Catastrophic bonds finance term by the Free Online Dictionary.

Catastrophe bond

Also known as cat bonds, these are used as a way for insurance agents to transfer risks to investors. They are often attractive to investors because the risks (like that of an earthquake) are uncorrelated with the business cycle â€“ and, hence, provide natural diversification.

Catastrophe Bond

A high-yield debt security backed by insurance premiums. Insurance companies issue catastrophe bonds in order to raise funds for hypothetical insurance payouts resulting from one or more stated events such as floods or fires. The bondholder receives coupons from what the insurance company collects in premiums. However, if the insurance company suffers a loss from a payout of one of stated events, the obligation to repay the bond is either relaxed or forgiven. The main advantage to a catastrophe bond, despite the stated risk, is the fact that it offers a high yield without much regard for the performance of the broader economy because people and institutions will almost always set money aside for insurance premiums.

catastrophe bond

A debt security with a payoff tied to the relative severity of a natural disaster such as a hurricane or earthquake. Bondholders are paid with insurance premiums but may have to accept reduced principal repayment in the event the specified disaster occurs during the life of the bond.

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Catastrophe Beneath the Heavens
Catastrophe bond
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Catastrophic Anthropogenic Global Warming
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Catastrophic Benefit
Catastrophic Benefits

Catastrophic bonds

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catastrophic care
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Catastrophic Level Event Emergency Response
Catastrophic Liability Fund
catastrophic limit
Catastrophic Major Medical Insurance
Catastrophic Medical Operations Center
Catastrophic Mission Failure
Catastrophic optical damage
Catastrophic Optical Mirror Damage

Catastrophe Bond (redirected from Catastrophic bonds)

Catastrophe Bond
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