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Author: Nico Gysi Publisher: ISBN: Category : Languages : en Pages :
Book Description
Since the insurance industry was struck by unprecedented high insurance losses caused by natural catastrophes in the early 1990s, the risk perspective of insurance and reinsurance companies regarding the handling of natural disaster risk has changed completely. The industry's ultimate desire to transfer a share of its risk to the capital markets has led to a continuous convergence of insurance and financial markets over the last two decades and the creation of a new asset class: insurance-linked securities. Catastrophe bonds have developed into the most successful instruments to help insurers and reinsurers to control their exposure to natural disaster risk and provided attractive investment options for investors. This paper provides an overview of the cat bond market's evolution, its current role and growth potential within the reinsurance market as well as a recap of previously conducted cat bond studies. The paper's focus is set on the analysis of the cat bond spread's determinants at the time of issuance. The analysis is based on a data sample of more than 300 cat bond transactions between 1997 and 2010 and was conducted using several multiple regression models, which identified the following factors as the key drivers of the cat bond issuance spread: expected loss, trigger structure, bond rating, peril type and the state of the underwriting cycle. The expected loss has the greatest impact on the spread level, with a spread to expected loss multiple of slightly over two. In contrast to findings of previous studies, indemnity trigger structures do not reward investors with higher premium spreads. Instead, the presence of an indemnity trigger structure decreases the cat bond spread by 62 bps. Ratings affect the spread level as expected. The higher the rating is, the lower is the cat bond spread. With regard to the different perils covered by cat bonds, the findings indicate that the spread level is highly sensitive to the cover.
Author: Nico Gysi Publisher: ISBN: Category : Languages : en Pages :
Book Description
Since the insurance industry was struck by unprecedented high insurance losses caused by natural catastrophes in the early 1990s, the risk perspective of insurance and reinsurance companies regarding the handling of natural disaster risk has changed completely. The industry's ultimate desire to transfer a share of its risk to the capital markets has led to a continuous convergence of insurance and financial markets over the last two decades and the creation of a new asset class: insurance-linked securities. Catastrophe bonds have developed into the most successful instruments to help insurers and reinsurers to control their exposure to natural disaster risk and provided attractive investment options for investors. This paper provides an overview of the cat bond market's evolution, its current role and growth potential within the reinsurance market as well as a recap of previously conducted cat bond studies. The paper's focus is set on the analysis of the cat bond spread's determinants at the time of issuance. The analysis is based on a data sample of more than 300 cat bond transactions between 1997 and 2010 and was conducted using several multiple regression models, which identified the following factors as the key drivers of the cat bond issuance spread: expected loss, trigger structure, bond rating, peril type and the state of the underwriting cycle. The expected loss has the greatest impact on the spread level, with a spread to expected loss multiple of slightly over two. In contrast to findings of previous studies, indemnity trigger structures do not reward investors with higher premium spreads. Instead, the presence of an indemnity trigger structure decreases the cat bond spread by 62 bps. Ratings affect the spread level as expected. The higher the rating is, the lower is the cat bond spread. With regard to the different perils covered by cat bonds, the findings indicate that the spread level is highly sensitive to the cover.
Author: Kenneth A. Froot Publisher: University of Chicago Press ISBN: 0226266257 Category : Business & Economics Languages : en Pages : 490
Book Description
Is it possible that the insurance and reinsurance industries cannot handle a major catastrophe? Ten years ago, the notion that the overall cost of a single catastrophic event might exceed $10 billion was unthinkable. With ever increasing property-casualty risks and unabated growth in hazard-prone areas, insurers and reinsurers now envision the possibility of disaster losses of $50 to $100 billion in the United States. Against this backdrop, the capitalization of the insurance and reinsurance industries has become a crucial concern. While it remains unlikely that a single event might entirely bankrupt these industries, a big catastrophe could place firms under severe stress, jeopardizing both policy holders and investors and causing profound ripple effects throughout the U.S. economy. The Financing of Catastrophe Risk assembles an impressive roster of experts from academia and industry to explore the disturbing yet realistic assumption that a large catastrophic event is inevitable. The essays offer tangible means of both reassessing and raising the level of preparedness throughout the insurance and reinsurance industries.
Author: J. David Cummins Publisher: World Bank Publications ISBN: 0821377361 Category : Political Science Languages : en Pages : 299
Book Description
'Catastrophe Risk Financing in Developing Countries' provides a detailed analysis of the imperfections and inefficiencies that impede the emergence of competitive catastrophe risk markets in developing countries. The book demonstrates how donors and international financial institutions can assist governments in middle- and low-income countries in promoting effective and affordable catastrophe risk financing solutions. The authors present guiding principles on how and when governments, with assistance from donors and international financial institutions, should intervene in catastrophe insurance markets. They also identify key activities to be undertaken by donors and institutions that would allow middle- and low-income countries to develop competitive and cost-effective catastrophe risk financing strategies at both the macro (government) and micro (household) levels. These principles and activities are expected to inform good practices and ensure desirable results in catastrophe insurance projects. 'Catastrophe Risk Financing in Developing Countries' offers valuable advice and guidelines to policy makers and insurance practitioners involved in the development of catastrophe insurance programs in developing countries.
Author: United States. Congress. House. Committee on Financial Services. Subcommittee on Oversight and Investigations Publisher: ISBN: Category : Catastrophe bonds Languages : en Pages : 288
Author: Tobias Götze Publisher: Cuvillier Verlag ISBN: 3736963785 Category : Business & Economics Languages : en Pages : 194
Book Description
Due to the increasing relevance of natural catastrophes as a significant global source of risk and the capacity constraints in primary insurance and reinsurance markets, CAT bonds have become an important instrument to manage catastrophe risks by transferring them to the capital market. In three empirical studies, this dissertation examines the challenges related to catastrophe risk management with CAT bonds. First, the factors that influence the substitution of traditional reinsurance by CAT bonds are identified. These factors consist of the insured risk layer and the extends of reinsurer default risk, basis risk, and asymmetric information. Second, the accessibility of the CAT bond market for (re)insurance companies is analyzed and the results exhibit the existence of barriers to market entry in the form of higher premiums being paid by less reputable and financially weaker CAT bond sponsors. The third empirical study shows that CAT bond sponsors are susceptible to moral hazard, but also that moral hazard can be successfully prevented by sufficient loss retention or by the use of non-indemnity CAT bonds. Altogether, this dissertation contributes to improving the understanding of the CAT bond market and the challenges of catastrophe risk management using CAT bonds.
Author: OECD Publisher: OECD Publishing ISBN: 9264803076 Category : Languages : en Pages : 138
Book Description
This report explores each of these conditions along with policy suggestions for fostering them, and discusses the development of multi-country CAT bonds in Asia and the Pacific.
Author: OECD Publisher: OECD Publishing ISBN: 9264046607 Category : Languages : en Pages : 166
Book Description
Includes reports on initiatives to promote natural hazard awareness and disaster risk reduction education, the role of financial markets in financial mitigation of large-scale risks, mechanisms used to quantify catastrophe losses, and hazard risk mapping efforts in Southeast Asian countries.
Author: Morton Lane Publisher: Bharat Book Bureau ISBN: 9781899332632 Category : Insurance Languages : en Pages : 684
Book Description
A ground-breaking volume that fully exposes the relatively new area of risk financing from traditional methods of insurance and provides analysis of the intersection of insurance and finance. \r\nKulp-Wright Book Award winner 2002 - Nominated "Runner-Up" by the American Risk and Insurance Association (ARIA)
Author: Financial Crisis Inquiry Commission Publisher: Cosimo, Inc. ISBN: 1616405414 Category : Political Science Languages : en Pages : 692
Book Description
The Financial Crisis Inquiry Report, published by the U.S. Government and the Financial Crisis Inquiry Commission in early 2011, is the official government report on the United States financial collapse and the review of major financial institutions that bankrupted and failed, or would have without help from the government. The commission and the report were implemented after Congress passed an act in 2009 to review and prevent fraudulent activity. The report details, among other things, the periods before, during, and after the crisis, what led up to it, and analyses of subprime mortgage lending, credit expansion and banking policies, the collapse of companies like Fannie Mae and Freddie Mac, and the federal bailouts of Lehman and AIG. It also discusses the aftermath of the fallout and our current state. This report should be of interest to anyone concerned about the financial situation in the U.S. and around the world.THE FINANCIAL CRISIS INQUIRY COMMISSION is an independent, bi-partisan, government-appointed panel of 10 people that was created to "examine the causes, domestic and global, of the current financial and economic crisis in the United States." It was established as part of the Fraud Enforcement and Recovery Act of 2009. The commission consisted of private citizens with expertise in economics and finance, banking, housing, market regulation, and consumer protection. They examined and reported on "the collapse of major financial institutions that failed or would have failed if not for exceptional assistance from the government."News Dissector DANNY SCHECHTER is a journalist, blogger and filmmaker. He has been reporting on economic crises since the 1980's when he was with ABC News. His film In Debt We Trust warned of the economic meltdown in 2006. He has since written three books on the subject including Plunder: Investigating Our Economic Calamity (Cosimo Books, 2008), and The Crime Of Our Time: Why Wall Street Is Not Too Big to Jail (Disinfo Books, 2011), a companion to his latest film Plunder The Crime Of Our Time. He can be reached online at www.newsdissector.com.
Author: Nico Gysi
Author: Nico Gysi
Author: Kenneth A. Froot
Author: J. David Cummins
Author: United States. Congress. House. Committee on Financial Services. Subcommittee on Oversight and Investigations
Author: Tobias Götze
Author: OECD
Author: OECD
Author: Morton Lane
Author: Financial Crisis Inquiry Commission
Author: