What is the definition of Catastrophe Bonds?
Catastrophe bonds are risk-based securities that are high-yield debt instruments. These pay high interest rates since it is based on risk. These catastrophe bonds enable insurance companies to raise money to pay for losses after a catastrophe such as an earthquake or hurricane. The risk is spread as it is sold as bonds to institution investors.
The condition surrounded by the catastrophe bonds is that if the bond issuer suffers loss because of a catastrophe that has been previously specified, then payments of the interest and sometimes even the principal may be completely forgiven or deferred. Thus, they are similar to floating rate bonds, as the principal may also be lost because of a specified catastrophe.
Catastrophe Bonds or CAT bonds provide an attractive return as compared to other alternative investments.
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- Catastrophe Deductible
- Catastrophe Factor
- Catastrophe Model
- Catastrophe Reinsurance
- Cell Phone Insurance
- Chartered Financial Consultant (ChFC)
- Chartered Life Underwriter (CLU)
- Chartered Property/Casualty Underwriter (CPCU)
- Claims Made Policy
- COBRA
- Catastrophe
- Cash Value
- Cash Surrender Value
- Cash Payment Option
- Cash Dividend Option
- Case Management
- Car Year
- Captives
- Captive Agent
- Capital Markets