Securitizing Property Catastrophe Risk - FEDERAL RESERVE BANK of NEW YORK

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Current Issues in Economics and Finance

Securitizing Property Catastrophe Risk

August 1996 Volume 2 Number 9

JEL classification: G10, G22

Authors: Sara Borden and Asani Sarkar

The trading of property catastrophe risk using standard financial instruments such as options and bonds enables insurance companies to hedge their exposure by transferring risk to investors, who take positions on the occurrence and cost of catastrophes. Although these property catastrophe risk instruments are relatively new products, they have already established an important link between the insurance industry and the U.S. capital market.

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6 pages / 77 kb

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