Summary

• Catastrophe bonds offer investors an attractive risk-adjusted and absolute return profile, in our view, that is structurally uncorrelated to traditional asset classes and historically less sensitive to broader market volatility.
• Beyond the attractive spreads on offer, cat bonds have historically delivered returns that are fundamentally uncorrelated to traditional financial markets, a quality that has been highlighted by recent global macro events.
• Demand for cat bonds has grown as investors increasingly recognize their diversification benefits, while sponsors have come to truly value capital markets as a reliable and complementary source of capacity, typically sitting alongside traditional reinsurance.

By Sophie Ware and George Caughey

Catastrophe bonds offer investors an attractive risk-adjusted and absolute return profile, in our view, that is structurally uncorrelated to traditional asset classes and historically less sensitive to broader market volatility.

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