Catastrophe bonds for UK investors: getting paid to weather risks [Members]
by Finumus
on August 28, 2025
Given the many threats seemingly on the cusp of sending humanity the way of the dinosaurs – from climate change to an AI takeover to political polarisation to that president – you’d think ‘catastrophe bonds’ wouldn’t need too much selling.
That’s true too if you’re worried about the high valuation of the US equity market. A NASDAQ bubble bursting wouldn’t blow-up the gene pool. But it would do a number on most US equity-heavy portfolios.
This article can be read by selected Monevator members. Please see our membership plans and consider joining! Already a member? Sign in here.
Comments on this entry are closed.
Thanks Finumus – great article.
Meb Faber’s podcast episode with the Man AHL Cat Bond team is worth a listen:
https://www.themebfabershow.com/episodes/ZjfjB60npYb
Unfortunately the Man fund isn’t accessible on mainstream platforms.
There’s a Franklin Templeton UCITS fund domiciled in Lux – you may have some luck getting that added to retail platforms but it doesn’t appear to be available on any that I can see at present.
Fascinating. Thank you @Finumus. Years ago had tiny stake in CATCo Reinsurance Opportunities Fund Ltd. Sold before 2019 run off. I suppose here it’s all the obvious drawbacks:
1. Picking up pennies in front of an approaching steam roller at unknown distance.
2. Why does the insurance industry want to expand issuance now (“primary supply breaking records”)? The only better time to buy than when there’s blood on the streets is when there’s noone in the streets, with a promising idea being ignored. That doesn’t appear the case here, notwithstanding difficulties in buying this stuff. If I can’t work out who the patsy at the table is, then it’s probably me, and, given info asymmetry, the insurance industry has a better handle on the risk it’s selling than I do on the risk I’d be taking on.
3). What about risks under the missing element in the Rumsfeldian epistemic matrix, unknown knowns? – Insured risks that we actually know about, but which studiously ignore, e.g. next Carrington event/solar flare (grid fried) or pandemic (when, not if). Does 12% p.a. really compensate?