×Catastrophe Bonds

For catastrophe bonds, there are two options. The first is a tailored parametric bond that has a trigger that references specific windstations. The bond, in effect, has its own custom index defined in the offering circular. This approach allows the issuer to tailor the bond to its risk profile. The second type of cat bond is based on a standardized industry loss index provided by RMS. This marries the parametric measurements from the windstations with RMS’s industry exposure database and vulnerability curves to create a “parametric industry loss index.”