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Current Issues in Economics and Finance
Securitizing Property Catastrophe Risk
August 1996  Volume 2, Number 9
JEL classification: G10, G22
 

Authors: Sara Borden and Asani Sarkar

The trading of property catastrophe risk using standard financial instruments such as options and bonds enables insurance companies to hedge their exposure by transferring risk to investors, who take positions on the occurrence and cost of catastrophes. Although these property catastrophe risk instruments are relatively new products, they have already established an important link between the insurance industry and the U.S. capital market.

 
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