Betting Against the Storm: The Architecture of Catastrophe Bonds
Hurricanes, Hedge Funds, and the Extreme High-Yield Market of Wall Street Disaster Insurance
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Beschreibung
They are not investing in companies. They are betting millions of dollars that a Category 5 hurricane will not hit Miami this year. If they are wrong, their entire investment vanishes instantly.
When a Category 5 hurricane destroys an entire coastline, the property damage can run into the hundreds of billions. Traditional insurance companies simply do not have the capital to cover this level of absolute devastation. To survive, they offload the ultimate apocalyptic risk directly onto Wall Street through Catastrophe Bonds (CAT Bonds).
This book exposes the extreme, high-stakes casino of weather derivatives. Hedge funds and pension managers buy these incredibly high-yield bonds, placing a massive, multi-million-dollar gamble against nature. If the specified hurricane or earthquake does not happen within three years, the investors walk away with staggering profits. If the disaster strikes and triggers the bond's strict physical parameters, the investors lose 100% of their principal instantly, and the money is given to the insurance company to rebuild the city.
We explore the brutal mathematical risk-modeling of atmospheric physics required to price these bonds, and how climate change is completely shattering the actuarial tables of global finance.
Step onto the most dangerous trading floor on Earth. Learn how Wall Street uses complex mathematical derivatives to place direct, multi-billion-dollar bets against the wrath of God.
Autor*in
Michael J. Scott
Author
Themen in »Betting Against the Storm: The Architecture of Catastrophe Bonds«
catastrophe bonds cat bonds weather derivatives finance wall street risk modeling hurricane insurance economics extreme event investing reinsurance capital markets hedge fund strategies