Prevalence of different catastrophe bond trigger mechanisms changes from year to year
February 21, 2014
Did you know that the prevalence of different catastrophe bond trigger mechanisms changes from year to year, largely as a result of broader reinsurance market trends? The current soft market in the reinsurance, retrocession, and insurance-linked securities risk transfer landscape means that sponsors have a greater ability to define structural components. To minimize basis risk, many sponsors opt for indemnity triggers, which explains the popularity of these transactions in recent years.