February 19th, 2015

Catastrophe Bond Indemnity Trigger in 2014

Posted at 1:00 AM ET

Eighty-one percent of the property and casualty (P&C) risk capital (based only on 144A cat bond transactions) was structured with an indemnity trigger on either a per-occurrence, annual aggregate or multi-year aggregate basis. The use of indemnity triggers increased steadily from a low of 30 percent in 2011 to 55 percent in 2013.

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As cat bond structures become more aligned with traditional (re)insurance contracts, the indemnity trigger has become a viable option particularly as investors become increasingly sophisticated and sponsors more transparent.

 

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