Catastrophe bond market doubles in size

Low correlation to bonds and stocks

The catastrophe bond market has doubled in size over the past decade to more than $40bn, following a growth in natural disasters, according to analysis by Morningstar.

This growth trend, which coincides with the greater frequency of natural disasters, emphasises the ongoing need for insurance for losses related to catastrophes. Fixed income in H1: 'Year of the bond' looks more like 'year of the coupon' Investors are attracted to catastrophe bonds because of their lower correlation to traditional bond and stock markets, due to the unpredictable nature of weather-related disasters and potential for higher returns, Morningstar found. Catastrophe bonds work with the investor receiving their money back plus interest if no disaster occurs. If a disa...