Catastrophe bond

Catastrophe bonds (also called "cat bonds" or “act of god bonds”) are bonds issued against the possibility of a catastrophe. They have been issued since 1994.

Generally, bonds are issued by insurance companies, and reinsurance companies in particular.

The bonds are designed to provide insurance companies with the financing necessary to cover damages caused by natural disasters.

As long as no catastrophes strike within the bond term, investors receive their money back along with generous returns.

If a natural disaster does hit, investors may lose all of the assets they’ve invested in catastrophe bonds.

That makes catastrophe bonds a high-risk investment based on pure speculation. But yield rates are also relatively high.

More information:
What is a bond?
Swiss trading comparison tool

About moneyland.ch

moneyland.ch is Switzerland’s independent online comparison service covering banking, insurance and telecom. More than 80 unbiased comparison tools and calculators are available on moneyland.ch, along with useful financial guides and timely news. The comprehensive comparison tools help you to find the right insurance policies, bank accounts, credit and prepaid cards, loans, mortgages, trading accounts and telecom products for your needs.