Close Menu
Invest Intellect
    Facebook X (Twitter) Instagram
    Invest Intellect
    Facebook X (Twitter) Instagram Pinterest
    • Home
    • Commodities
    • Cryptocurrency
    • Fintech
    • Investments
    • Precious Metal
    • Property
    • Stock Market
    Invest Intellect
    Home»Investments»Catastrophe-bond funds see risk premiums rising after Milton
    Investments

    Catastrophe-bond funds see risk premiums rising after Milton

    October 12, 20243 Mins Read


    (Bloomberg) — The cost of issuing catastrophe bonds looks set to go up, as asset managers who specialize in the securities react to the fallout from Hurricane Milton.

    Most Read from Bloomberg

    Though cat-bond portfolios will likely see a much smaller dent than initially estimated after Milton, “every loss withdraws risk-bearing capital from the market and reduces reinsurance capacity,” Plenum Investments Ltd. told investors in an emailed update on Saturday. As a result, “risk premiums in the cat-bond market are likely to increase again” from what’s already an “historically high level,” it said.

    The prediction comes despite evidence that investors may now be facing minimal losses. Milton, which ripped through Florida as a Category 3 hurricane in the early hours of Thursday, may have caused less than $60 billion in damages, compared with earlier predictions of more than $100 billion, according to Bloomberg Intelligence.

    “It played out in the end a bit better than at some point was forecast,” Tanja Wrosch, head of cat-bond portfolio management at Twelve Capital AG, said in an interview with Bloomberg Television on Thursday.

    Current estimates show that the cat-bond market looks to have dipped just 1.34%, according to Artemis, which cited end-of-week pricing calculated by Swiss Re Capital Markets. The US wind specific version of the index fell 3.64%, it said. Earlier in the week, forecasters had warned of losses as deep as 15%.

    The risk premium was about 6.5% as of Sept. 27, on top of which investors receive the Treasury rate of about 4.6%, according to Artemis.

    Catastrophe bonds are issued by insurers, reinsurers and governments to provide financial protection against the most severe natural disasters. Investors who buy the bonds stand to make sizeable gains if a predefined event doesn’t occur, but can lose much of their capital if it does. That capital is then used to cover insurance claims.

    Cat bonds have so far been spared a major trigger event in what meteorologists are calling one of the most active hurricane seasons in recent memory. The bonds benefit from carefully calibrated terms calculated by some of the finance industry’s most sophisticated analysts.

    While cat-bond investors look to be facing minimal losses after Hurricanes Helene and Milton, the picture on the ground remains dire for millions of people.

    Last year, cat bonds underpinned the most profitable hedge fund strategy of them all, namely insurance-linked securities, according to an analysis provided by Preqin.

    After Hurricane Ian hit in 2022, the Swiss Re Index took an initial hit of more than 10%, but the market recovered quickly and the index ended the year down just 2%. Those losses were still enough to lead investors to demand meaningfully higher risk premiums, helping drive up returns. In 2023, the Swiss Re cat-bond index soared a record 20%, trouncing returns across other key debt markets.

    Plenum said its prediction that risk premiums will rise depends on a number of parameters, including final claims, meaning the ultimate outcome remains “difficult to estimate.”

    Most Read from Bloomberg Businessweek

    ©2024 Bloomberg L.P.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

    Related Posts

    Portable Retirement Gratuity Fund : 7,936 dossiers toujours en attente

    Investments

    Salt Investments finalise l’acquisition de 60 % des parts de TT Oil

    Investments

    ‘A firm I’ve never heard of has contacted me about old investments’

    Investments

    Pension investments: Six steps to follow when looking at your retirement savings

    Investments

    Selon un récent dépôt auprès de la SEC, Sei Investments Insider a vendu des actions pour une valeur de 12 006 823 dollars.

    Investments

    Un actionnaire de Skechers poursuit le fabricant de chaussures pour obtenir des détails sur le rachat de 9,4 milliards de dollars par 3G

    Investments
    Leave A Reply Cancel Reply

    Top Picks
    Cryptocurrency

    Six accused of illegal £6m cryptocurrency operation in Glasgow

    Commodities

    Les bénéfices de Zhejiang China Commodities City augmentent de 15% ; les actions progressent de 5%.

    Investments

    Data reveals small number of property investors control big chunk of Australian rentals

    Editors Picks

    UK house prices could surge in 2025: prediction

    October 27, 2024

    NDSU’s Hellevang receives award for global work in agricultural engineering

    August 28, 2024

    Pakistan fintech PostEx raises $7.3m in funding

    August 20, 2024

    leurs mentions dans les dossiers de la SEC explosent

    May 6, 2025
    What's Hot

    Agriculture program at U. City High grows like a weed

    October 26, 2024

    East European countries urge EU to limit agricultural imports from Ukraine – Business & Economy

    February 23, 2025

    New Cryptocurrency Releases, Listings, & Presales Today – SoSoValue, GoldToken, BNB Agents

    February 19, 2025
    Our Picks

    Pa. awarded over $1.7M for residential energy workforce

    October 25, 2024

    Data reveals small number of property investors control big chunk of Australian rentals

    October 16, 2024

    Urban agriculture site at Savocchio Park takes shape

    August 17, 2024
    Weekly Top

    La fintech Chime vise une valorisation de 9,5 milliards de dollars lors de son introduction en Bourse aux États-Unis

    June 2, 2025

    Bihar has tremendous potential for agricultural development: Shivraj Singh Chouhan | India News

    June 2, 2025

    Un groupe de métal indonésien portant le hijab se produit au Japon

    June 2, 2025
    Editor's Pick

    NAFED may tap private storage as capacity falls short

    February 17, 2025

    Industrial Energy Management Systems (IEMS) Global

    August 23, 2024

    XAG/USD maintains position above $30.50 near nine-day EMA

    January 21, 2025
    © 2025 Invest Intellect
    • Contact us
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.