Apocalypse Dow

Bloomberg looks at the market for catastrophe bonds–debt linked to “insurance claims from calamities such as hurricanes, earthquakes or disease.”

Swiss Reinsurance Co., the world’s largest reinsurer, estimates the market for insurance-linked securities, which includes everything from Triple-X and bird flu bonds to so-called sidecars, will grow to $350 billion in a decade after more than quadrupling to $27 billion in the past five years. With as much as $2 billion in underwriting fees up for grabs, almost every investment bank, from Lehman Brothers Holdings Inc. to Deutsche Bank AG, is building teams to sell and trade insurance.
“You can’t match these yields,” said Brynjolfsson, who holds $1 billion of catastrophe bonds at Newport Beach, California-based Pimco. “They fully compensate the investor for the risks that are being underwritten and provide an additional premium. I’m making a real strong push with issuers and Wall Street to bring out more of these securities for my investors.”

Posted by on February 6th, 2007 at 11:07 am


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