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Catastrophe Bonds Unbowed by Hurricane Sandy

Investors who have put their money into specialist financial bonds which cover insurance companies from huge natural disasters are unlikely to be hit with big losses from monster storm Sandy even though it is one of the biggest ever to hit the United States.

By Sarah Mortimer, Reuters | Updated on October 31, 2012

LONDON (Reuters) – Investors who have put their money into specialist financial bonds which cover insurance companies from huge natural disasters are unlikely to be hit with big losses from monster storm Sandy even though it is one of the biggest ever to hit the United States.

So-called catastrophe bonds represent an obscure part of the insurance industry in which insurance and reinsurance companies transfer extreme risks, such as those for earthquakes and hurricanes, to financial market investors who receive a handsome yield in return for agreeing to cover damages they consider unlikely.

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