How cat bonds are structured

J. David Stein outlines SPVs, collateral trusts, triggers (indemnity vs industry loss), and premium mechanics for investors.

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Episode notes

A new ETF allows individuals to earn income by insuring against natural disasters through investing in catastrophe bonds. We break down the historical returns, risk, fees, and structure of this intriguing investment opportunity.

Topics covered include:

What types of natural disasters are increasing
How insurance companies use reinsurance and cat bonds to protect against extreme losses
Why home insurance premium increases should be lower in 2026
How cat bonds are structured and what makes them a unique fixed income security
What to consider in deciding to invest in cat bonds.

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Investments Mentioned

Brookmont Catastrophic Bond ETF (ILS)

Stone Ridge High Yield Reinsurance Risk Premium Fund (SHRIX and SHRMX)

Show Notes