Catastrophe bonds hit by Japan earthquake
Cat bonds had been the leading feature of an insurance-linked securities market that was poised for a renaissance, but will the aftermath of the Japan earthquake cause a slowdown in the market? Thomas Whittaker reports on the short- and medium-term effects of the recent disaster
The recent earthquake in Japan is causing uncertainty over whether a number of catastrophe (cat) bonds will be triggered, and what the broader consequences could be for the market.
According to Moody’s Investors Service, four cat bonds are directly exposed to Japanese earthquake risk: Muteki Ltd Series 2008–1; Valais Re Ltd Series 2008–1; Vega Capital Ltd Series 2008–1; and Vega Capital Ltd Series 2010–1.
Cat bonds are designed to transfer risks from reinsurance companies, sponsors of the deals
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