This case is aboutÂ FINANCIAL MARKETS
PUBLICATION DATE: September 02, 2004
Bank Leu’s Prima Cat Bond FundÂ Case Solution
In 2001, Bank Leu, a Swiss private bank, is considering creating the world’s first public fund for catastrophe bonds. Cat bonds are securities whose payments are determined by the chance of a disaster happening, like hurricane or an earthquake.
Cat bonds are issued by big insurance or reinsurance firms. This case outlines the traditional reinsurance market and securitization efforts that have taken place in the past and focuses on the choice of Bank Leu as a buyside participant in the cat bond market.