ChatterBank1 min ago
Cat Bonds
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What is a cat bond and how does it work?
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If an insurer has a portfollio of risk investments,eg hurricane known zones they can pass some of this risk over by sponsoring Cat(catastrophe) bonds, which passes the risk to the investor of the bond. If no catastrophe occurs the investor makes a good profit. If one does happen then this money is used to pay the policy holders.
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