Attachment Point

In catastrophe bonds or other forms of ILS such as collateralized reinsurance, the attachment point is a metric that defines the specific level of loss ($ amount) at which an insurance-linked securities (ILS) contract starts to pay out.

For example, a catastrophe bond might cover a layer of risk “in excess of” $100 million. The $100 million is the attachment point.

The attachment point, in a catastrophe bond or reinsurance, is typically above a retention level and any underlying layers of risk transfer protection.