Cat Bond Lite: Market Curiosity and Growth

By James Horner March 17, 2015

WRIN.tv (World Risk and Insurance News TV) caught up with Tom Johansmeyer, AVP Reinsurance Services at ISO, at the IRLS Conference in New York on March 4, 2015, to discuss the latest trend in the linked securities industry.

Johansmeyer said that ISO noticed growing market interest in “cat bond lite,” a streamlined approach to the securitization of risk.

Although the cat bond lite market is opaque, ten publicly revealed private transactions were completed in 2014 for a total of $242 million. Johansmeyer said that “cat bond lite is addressing the need to reduce frictional cost and gaining a nimble stance in tactical risk transfer.”

Johansmeyer is optimistic about the future of the cat bond lite market. So far, in the first quarter of 2015, $200 million in publicly revealed transactions has been completed. Johansmeyer said, “I see a strong area of potential growth because frictional costs are something everyone is sensitive to in the market.” The numbers suggest that 2015 will bring significant growth.

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