A growing feature of the securitisation market in two years has been the development of instruments designed to help manage risk outside the traditional geographical areas
A growing feature of the securitisation market in two years has been the development of instruments designed to help manage risk outside the traditional geographical areas.
Swiss Re, for example, structured and placed $85 million of securities which were the first covering US windstorm events and earthquakes in California and Central America. The bond, GlobeCat, is the first ever linked to Central American earthquake.
The goal of the GlobeCat securitisation is to create a platform and a model by which charitable foundations, governmental relief organisations and corporations can have funds available quickly for relief efforts rather than having to raise them after the event. The market for such products may be close to take off. In January 2008, the Bill & Melinda Gates Foundation awarded $34 million to the International Labour Organization for work to develop or improve insurance products for tens of millions of low income people in the developing world.
The US Rockefeller Foundation is also considering some of these approaches as part of its climate change initiative. For a discussion of the development of insurance related transactions to support disaster planning and relief, see the article Public-Private Partnerships Address the Financial Consequences of Natural Disasters on page 29.