Catastrophe Bond
In a world of high inflation and volatile financial markets, investors are increasingly seeking ways to protect returns and diversify their portfolios. Cat bonds are ideally placed to provide just this. At Dashwood, we partner with recognised insurance-risk industry leaders to offer these distinctive and specialist cat bond strategies to our clients.
WHAT ARE CAT BONDS?
Cat bonds, a type of insurance-linked security (ILS) are fixed income instruments issued by insurers and reinsurers to transfer to investors exposures from potentially large insured losses associated with natural catastrophes, as well as other ‘perils’ such as terrorism and cyber risk. These bonds provide a form of reinsurance so that the insurer’s liabilities are covered, and they can afford to settle in full and aid recovery. In return – investors in Cat Bonds get paid a fixed rate of interest – just like a regular bond. The skill is to calculate each Cat Bond’s true risk and identify the opportunities with the most attractive yields.
WHY INVEST IN CAT BONDS NOW?
Diverse return drivers
Uncorrelated with broader financial markets
Enhanced liquidity
Strong ESG credentials
Attractive entry levels relative to history