Structure
Most catastrophe bonds are issued by special purpose reinsurance companies domicilied in the Cayman Islands, Bermuda, or Ireland. These companies typically write one or more reinsurance policies to protect buyers (most commonly, insurers or reinsurers) called "cedants." This contract may be structured as a derivative in cases in which it is "triggered" by one or more indices or event parameters (see below), rather than losses of the cedant.
Some bonds cover the risk that multiple losses will occur. The first second event bond (Atlas Re) was issued in 1999. The first third event bond (Atlas II) was issued in 2001. Subsequently, bonds triggered by fourth through ninth losses have been issued, including Avalon, Bay Haven, and Fremantle, each of which apply tranching technology to baskets of underlying events. The first actively managed pool of bonds and other contracts ("Catastrophe CDO") called Gamut was issued in 2007, with Nephila as the asset manager.
Read more about this topic: Catastrophe Bond
Famous quotes containing the word structure:
“It is difficult even to choose the adjective
For this blank cold, this sadness without cause.
The great structure has become a minor house.
No turban walks across the lessened floors.
The greenhouse never so badly needed paint.”
—Wallace Stevens (1879–1955)
“One theme links together these new proposals for family policy—the idea that the family is exceedingly durable. Changes in structure and function and individual roles are not to be confused with the collapse of the family. Families remain more important in the lives of children than other institutions. Family ties are stronger and more vital than many of us imagine in the perennial atmosphere of crisis surrounding the subject.”
—Joseph Featherstone (20th century)
“Each structure and institution here was so primitive that you could at once refer it to its source; but our buildings commonly suggest neither their origin nor their purpose.”
—Henry David Thoreau (1817–1862)