cat fund

plural cat funds

1. alternativeAlternative spelling of CAT fund.

plural CAT funds

1. Clipped compound of catastrophe fund: a state-run fund that reimburses an involved party (usually an insurer, sometimes a policyholder) when unexpectedly large losses threaten to bankrupt that party.

   1 more example

   In the past, the CAT bond market has been criticized for lack of investor interest. However, that assessment is now outdated—recent data suggest broad market interest in CAT bonds among institutional investors. Figure A9.8 shows the percentage of new issue volume by investor type in 1999 and 2007. In 1999, insurers and reinsurers were very prominent on both the supply and demand sides of the market and were among the leading investors in the bonds, accounting for 55 percent of the market. If insurers and reinsurers are on both sides of the market, the market cannot be said to have attracted very much new capital into the financing of catastrophic risk. However, by 2007, insurers and reinsurers accounted for only 7 percent of demand, suggesting that substantial external capital has been attracted to the market. Dedicated CAT funds accounted for 55 percent of the market in 2007, and money managers and hedge funds accounted for 36 percent. The declining spreads and increasingly broad market interest in the bonds suggest that the bonds are attractive to investors and are playing an increasingly important role relative to conventional reinsurance.

   2009, J. David Cummins, Olivier Mahul, “CAT Bonds and Other Risk-Linked Securities: State of the Market and Recent Developments”, in Catastrophe Risk Financing in Developing Countries: Principles for Public Intervention (World Bank e-Library), World Bank Publications, →ISBN, page 226