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is rated based on its probability of default due to a qualifying catastrophe triggering loss of principal.
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By year end 2006, it began to appear as though supply and demand in the reinsurance and
catastrophe bond markets had achieved balance at the prevailing price level.
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Wikipedia
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Catastrophe bonds are typically used by insurers as an alternative to traditional catastrophe reinsurance.
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These were the first true sidecars, and were a natural outgrowth of the development of re/insurance as an asset class in the form of catastrophe bonds.
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Wikipedia
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