Ever since the collapse of Lehman Brothers the tangled web of connections made through re/insurance linked deals with the firm have gradually unravelled to expose the massive influence and impact the companies failure had. A number of catastrophe bonds were impacted by Lehman’s collapse but the impact to reinsurers has spread beyond the cat bond […]
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Standard & Poor’s has issued a report which reiterates that one of the key exposures in a securitization transaction (that includes insurance-linked securitization through catastrophe bonds) is counterparty risk. The risk of a counterparty being unable to meet its obligations within a transaction is central to S&P’s analysis of creditworthiness.
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The debate over what instrument catastrophe bonds should use as a source of collateral going forwards is raging. There’s an interesting article here on Insurance Journal discussing this issue (but sadly not offering any solution). This feels like an issue which is not going to be solved by a one size fits all replacement for […]
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