Cat product to transfer oil spill risk to capital markets
Catastrophe product looks to capitalise on perceived investor appetite for oil spill risk
In response to the impact of recent oil spill liability claims within the oil industry, CatVest Petroleum Services has developed a product designed to replicate securitisation vehicles used in the capital markets by insurers that need to hedge catastrophe risks such as hurricanes and earthquakes.
Issuers of insurance-linked securities (ILS) typically sell tranches of risk as securities to investors. If pre-set trigger parameters within the contracts are met, investors’ principal is paid out as
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