Losses to cause reinsurance rates to rise and increase interest in catastrophe bonds

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Recent catastrophes such as the Chile earthquake and European windstorm Xynthia are going to cause high losses amongst reinsurers around the globe. Insurers and reinsurers will be reporting large drops in their profitability for this year which comes as a complete contrast to 2009 which saw losses lower than average. This could be good news for the catastrophe bond market as the capital market instruments could become more attractive and also cheaper (comparatively) to reinsurance.

Reuters has a good piece on this issue available here.

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