The string of catastrophes in the first half of 2011 that wrought so much destruction and caused so many insurer losses also spurred the possibly record-setting formation of special-purpose insurers (SPIs) in Bermuda with 17 formed so far this year.
The majority of those formations have been created for issuing cat bonds, the Bermuda Monetary Authority (BMA) tells NU.
SPIs are fully funded insurance entities normally formed for a single transaction; they enable insurers to raise capital by transferring risk for major natural perils like hurricanes or earthquakes via capital market vehicles, typically by issuing cat bonds to third parties.
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