More Cat Bonds This Year

Given that a decent chunk of my work right now is fallout from the rate
hikes on cat treaty renewals this year, I found thi
s story at Business Insurance interesting:

Global insurers are offloading more of their hurricane risk
onto the bond market this year, after suffering $58 billion of storm losses
in 2005.

Property casualty carriers like Swiss Reinsurance Co. and ACE Ltd. issue
catastrophe or “cat” bonds to shift more of their exposure to investors such
as hedge funds.[...]

The bonds, which allow investors to speculate on potential damage from
storms, earthquakes and other natural disasters, are a fast-growing example
of Wall Street’s drive to package unusual risks into bonds.

Despite the tone of the article, cat bonds are still just a tiny piece of
the reinsurance puzzle. However, given the tightening of capital in the
wake of results of the past couple of years, it is nice to see them gain a
little larger share of the spotlight.