Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Corporate cat bond

A corporate cat bond is a cat bond that is sponsored directly, or indirectly, by a company, corporation, or other similar entity.

Increasingly, corporations and companies are accessing the insurance-linked securities (ILS) markets directly, or indirectly with the help of reinsurance market participants, to access the capital market investor appetite for insurance risk.

Corporate cat bond sponsors typically seek protection against peak catastrophe perils through issuance of cat bonds.

A fronting reinsurer, or a captive insurance entity, are often used to interface with the issuing vehicle and act as an intermediary between the corporate sponsor and the capital markets investors, to cascade the cat bond coverage down to the corporate sponsor as insurance protection.