Monday, April 16, 2012

A Problem with Catastrophe Bonds


Today, the Financial Times reported that catastrophe bond issuance has "hit its highest level" since the market began.  Serge Chiaramonet of Credit Suisse Asset Management, suggests that despite the perceived current success, there are not enough parties involved.
The main problem with the cat bond market is that a relatively small number of players control a very large part of the market. You probably have seven or eight investors that control the majority of the demand.

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