1. 10.01.2012
CAT DERIVATES
NEW WAY TO INSURE CATASTROPHE LOSSES
Daniel Meyer
Daniel Meyer

2. INTRODUCTION
 More natural disasters since 1970
 Four times more from 100 to 400
 Hurricane Andrew and Northridge earthquake sum up to
30 billion USD insurance loss
 Possible rise to 100 billion USD
 decrease of losses caused by
 population growth
 urban conglomerations
 climatic change
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10.01.2012 Daniel Meyer

3. PROBLEM
 The money of the insurance market is not sufficient
 Traditional Reinsurances are inappropriately
 30 billion USD correspond to 30% of the whole
insurance market
 The rise of natural disasters will increase
Solution:
 Need of a new source of capital
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4. SOLUTION FOR INSURANCE COMPANIES
 Source Catastrophe Risk to the Capital market
 Attractive investment options for new investors
 Need of new financial products:
 Cat-Bonds
 Cat-Options
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5. CAT-BONDS
 Simple finance product
 fix payments addicted to a natural desaster
 Three characteristics if a special trigger is achieved:
 Loss of the whole money
 Decrease of the monthly payments
 No exposure payments anymore
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6. CAT-OPTIONS
 More complex Instrument
 Linked to a Catastrophic-Loss Index
 Limited amount of losses or gains
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7. CONCLUSION
 New ways to insure values Catastroph risk are needed
 The Capital market is a good alternative to the insurance
market as a source of capital
 About 13 trillion USD
 Cat Derivates are a good alternative for investors to
traditionel financial products
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10.01.2012 Daniel Meyer