Praying for a catastrophe

February 01, 1999

The logic of plugging together two industries - insurance and capital markets - is irrefutable and inevitable. But pricing insurance risk and selling it to investors is a painful process, frustrated by a glut of insurers selling their cover too cheaply. The visionaries are positioning themselves for a change in circumstances that could be swift and merciless, like the perils they're trying to insure. By David Shirreff.

Cat bond prices are quoted on Bloomberg by Swiss Re New Markets

Current Indicative Prices and Yields December 31 1998 12:01
January 4th, 1999
These levels are INDICATIVE ONLY, please call for live quotes. Mike Angerame (212) 317-5570
	Price	Yld over benchmark	Underlying risk
*SR Earthquake Class "B"	100 8/32-101	(5.60-4.20%)	CA Earthquake
*SR Earthquake Class "C"	100 25/32-101 2/32	(6.15-5.55%)	CA Earthquake
*Parametric Re	101 5/32-101 24/32	(2.00-0.85%)	US Total Cover
Mosaic Re	101 5/32-101 24/32	(2.00-0.85%)	US total cover
Residential Re	101 9/32-101 18/32	(0.90-0.20%)	Florida Wind
Trinity 1999	99 17/32-100 20/32	(4.65-3.50%)	Florida Wind
Pacific Re	Call for current quote		Japan Wind
* Denotes Private Placements by Swiss Re Capital Markets, Please call for
Copyright 1998 BLOOMBERG L.P.

For three years British Aerospace talked to investment banks about securitizing the downside risk in its aircraft lease portfolio.

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February 1999