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Economic Aspects of Securitization of Risk

Published online by Cambridge University Press:  29 August 2014

Samuel H. Cox ,
Joseph R. Fairchild  and
Hal W. Pedersen
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Abstract

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This paper explains securitization of insurance risk by describing its essential components and its economic rationale. We use examples and describe recent securitization transactions. We explore the key ideas without abstract mathematics. Insurance-based securitizations improve opportunities for all investors. Relative to traditional reinsurance, securitizations provide larger amounts of coverage and more innovative contract terms.

Keywords

Securitizationcatastrophe risk bondsreinsuranceretentionincomplete markets
Type
Workshop
Information
ASTIN Bulletin: The Journal of the IAA , Volume 30 , Issue 1 , May 2000 , pp. 157 - 193
Copyright
Copyright © International Actuarial Association 2000

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