Business and Economic Horizons

  Previous Article | Back to Volume | Next Article
  Abstract | References | Citation | Download | Preview | Statistics
Volume 14
Issue 2
Online publication date 2018-02-22
Title Are catastrophe bonds effective financial instruments in the transport and infrastructure industries? Evidence from international financial markets
Author Fabio Pizzutilo, Elisabetta Venezia
Abstract We analyse the effectiveness of catastrophe bonds for the financial management of catastrophic risk in the transport and infrastructure industries. We illustrate how these financial instruments are becoming a valuable tool for non-financial firms in the risk management of catastrophic events, supplementing the traditional insurance/reinsurance channel, especially during times of constraints in the insurance industry. We also review cat bond issues sponsored by infrastructure and transport companies, highlighting the usefulness of these structured financial instruments in the management of the catastrophe exposure in these industries. Policy indications are finally given. 
Citation
References
Banks, E. (2005). Catastrophic risk: analysis and management. Chichester, England: John Wiley and Sons Ltd.

Carayannopoulos, P., & Perez, F. M. (2015). Diversification through catastrophe bonds: lessons from the subprime financial crisis. The Geneva Papers on Risk and Insurance, 40(1), 1-28.

Cossette, H., Duchesne, T., & Marceau, E. (2003). Modeling Catastrophes and their Impact on Insurance Portfolios. North American Actuarial Journal, 7(4), 1-22.

Croson, D. C., & Kunreuther, H. C. (2000). Customizing indemnity contracts and indexed cat bonds for natural hazard risks. The Journal of Risk Finance, 1(3), 24-41.

Cummins, J. D., Doherty, N., & Lo, A. (2002). Can insurers pay for the ‘‘big one’’? Measuring the capacity of the insurance market to respond to catastrophic losses. Journal of Banking & Finance, 26, 557-583.

Doherty, N. A. (1997). Financial innovation in the management of catastrophe risk. Applied Corporate Finance, 10(3), 84-95.

Foote, M., Hillier, J., Mitchell‐Wallace, K., & Jones, M. (2017). Natural catastrophe risk management and modelling: A practitioner's guide. John Wiley & Sons, Ltd.

Froot, K. (2001). The market for catastrophe risk: a clinical examination. Journal of Financial Economics, 60(2-3), 529-571.
Garg, A., Naswa, P., & Shukla, P. R. (2015). Energy infrastructure in India: Profile and risks under climate change. Energy Policy, 81, 226-238.

Gibson, R., Habib, M. A., & Ziegler, A. (2014). Reinsurance or securitization: The case of natural catastrophe risk. Journal of Mathematical Economics, 53, 79-100.

Gürtler, M., Hibbeln, M., & Winkelvos, C. (2014). The impact of the financial crisis and natural catastrophes on CAT bonds. The Journal of Risk and Insurance, 83(3), 579-612.

Hagendorff, B., Hagendorff, j., Keasey, K., & Gonzalez, A. (2014). The risk implications of insurance securitization: The case of catastrophe bonds. Journal of Corporate Finance, 25, 387-402.

Harrington, S. E., & Niehaus, G. (2003). Capital, corporate income taxes, and catastrophe insurance. Journal of Financial Intermediation, 12, 365-389.

Komljenovic, D., Gaha, M., & Abdul-No, G. (2016). Risks of extreme and rare events in Asset Management. Safety Science, 28, 129-145.

Lai, V. S., Parcollet, M., & Lamond, B. F. (2014). The valuation of catastrophe bonds with exposure to currency exchange risk. International Review of Financial Analysis, 33, 243-252.

Lakdawalla, D., & Zanjani, G. (2012). Catastrophe bonds, reinsurance and the optimal collateralization of risk transfer. The Journal of Risk and Insurance, 79(2), 449-476.

Lee, J. P., & Yu, M. T. (2007). Valuation of catastrophe reinsurance with catastrophe bonds. Insurance: Mathematics and Economics, 41(2), 264-278.

Loubergé, H., Kellezi, E., & Gilli, M. (1999). Louberge, H., Kellezi, E., Gilli, M., 1999. Using catastrophe-linked securities to diversify insurance risk: A financial analysis of CAT bonds. Journal. Journal of Insurance Issues, 2(125-146).

Ma, Z. G., & Ma, C. Q. (2013). Pricing catastrophe risk bonds: A mixed approximation method. Insurance: Mathematics and Economics, 52(2), 243-254.

Mariani, M., & Amoruso, P. (2016). The effectiveness of catastrophe bonds in portfolio diversification. International Journal of Economics and Financial Issues, 6(4), 1760-1767.

Niehaus, G. (2002). The allocation of catastrophe risk. Journal of Banking & Finance, 26, 585-596.

Posner, R. A. (2004). Catastrophe: Risk and response. Oxford University Press.

Smack, L. (2016). Catastrophe bonds - regulating a growing asset class. Risk management and Insurance Review, 19(1), 105-125.

Vaugirard, V. E. (2003). Valuing catastrophe bonds by Monte Carlo simulations. Applied Mathematical Finance, 10(1), 75-90.

World Bank. (2012). Advancing disaster risk financing and insurance in ASEAN member states : Framework and options for implementation. Washington, DC.: World Bank.

World Meteorological Organization. (2013). The global climate 2001-2010: a Decade of Climate Extremes. 

Zhang, B. (2004). What kind of new asset will push up the CML? Insurance: Mathematics and Economics, 34, 539-545.
Keywords Catastrophe bonds, risk management, investment analysis, public investment, infrastructures, transportation
DOI http://dx.doi.org/10.15208/beh.2018.20
Pages 256-267
Download Full PDF Download
  Previous Article | Back to Volume | Next Article
Share
Search in articles
Statistics
Journal Published articles
BEH 558
Journal Hits
BEH 1133781
Journal Downloads
BEH 41281
Total users online -