Read all of our parametric cat bond news, analysis and reporting in this archive.
Parametric triggers have always featured in the catastrophe bond market since its inception, with certain types of sponsors and risk transfer use-cases benefiting from the predictable and transparent payout structures they provide.
Parametric catastrophe bonds offer a way coverage can be secured for perils and regions where economic exposures are the main threat, rather than insured losses.
Parametric cat bonds are also often utilised by corporate cat bond sponsors, as a way to augment protection for exposures including business interruption type risks.
A very interesting new catastrophe bond transaction has been launched to investors. PennUnion Re Ltd. (Series 2015-1) is a $200m (or larger) parametric U.S. storm surge, wind and earthquake bond, with the ultimate sponsor and beneficiary being passenger rail company Amtrak.
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The Turkish Catastrophe Insurance Pool (TCIP) is returning to the catastrophe bond market for an anticipated second earthquake deal, with another parametric trigger structure under a Bosphorus Ltd. (Series 2015-1) transaction.
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The use of parametric triggers in catastrophe bonds are the best path to a sustainable, lower cost of capital and towards realising the vision of the cat bond as a robust asset class, Samir Shah, Head of Capital Markets and Catastrophe Risk at AIG, told Artemis.
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