Cat bond catalog basics

The cat bond catalog is the reference layer for the insurance-linked securities market: a searchable record of catastrophe bonds with their perils, geographies, and trigger structures. It is where you go to look something up, as opposed to Triggers, which is where you go to watch something.

What a cat bond is

A catastrophe bond transfers catastrophe risk from a sponsor — typically an insurer, reinsurer, or public entity — to capital markets investors. Investors receive a coupon; if a defined catastrophe occurs, some or all of the principal is used to pay the sponsor's losses instead of being returned.

Because the returns depend on whether a hurricane makes landfall rather than on what equity markets do, the asset class is largely uncorrelated with the rest of an institutional portfolio, which is the substantive reason it exists.

Reading a bond's entry

Each bond has a detail page covering its peril and geographic scope, its trigger structure, and its status. The field that determines everything else is the trigger type:

• Parametric — settles on a physical measurement, such as wind speed or magnitude, in a defined geography. Objective and fast; carries basis risk, because the measurement can fire without matching the sponsor's actual loss, and vice versa.
• Indemnity — settles on the sponsor's actual incurred losses. No basis risk for the sponsor, but resolution is slow and depends on claims development.
• Industry loss — settles on an estimate of total industry loss from a reporting agency. A middle position between the two.
• Modelled loss — settles on the loss a specified model produces when the actual event parameters are run through it.

Only parametric and industry-loss structures can be meaningfully tracked against live physical data. Indemnity and modelled-loss bonds resolve on processes that no real-time feed observes, and the catalog does not imply otherwise.

Connecting the catalog to monitoring

The catalog is reference data; it does not watch anything on its own. To monitor a position, create a trigger in Triggers that mirrors the bond's parametric structure — same geography, same measurement, same threshold — and the platform evaluates it against live event data.

Transcribe from the bond documentation, not from the catalog entry. The catalog is a research aid assembled from public sources; the offering documents are the authority, and if the two disagree, the documents win. This is exactly the point at which a transcription error becomes expensive.

Setting an ILS parametric trigger covers the mechanics.

Coverage and provenance

Catalog entries are built from publicly available issuance information and carry their source. Coverage is best for the publicly-discussed 144A market and thinner for privately placed transactions, which are not publicly documented in a way any catalog can capture. Treat absence from the catalog as absence of public information, not as evidence a deal does not exist.