ESG & Investing
Catastrophe Bonds Look Set to Dodge Losses as LA Fires Rage
- Blazes seen causing insured losses of about $20 billion
- Cat-bond holders see little impact for their investments
A firefighter hoses down a burning house during the Eaton Fire in Altadena, California, on Jan. 8.
Photographer: Michael Nigro/BloombergThis article is for subscribers only.
The wildfires sweeping through Los Angeles are unlikely to trigger significant losses for catastrophe bonds designed to capture such risks.
Roughly 12% of the $50 billion cat-bond market is currently exposed to wildfire risk, according to Florian Steiger, chief executive officer of Icosa Investments AG, a Swiss-based investment firm. Even in an “extreme scenario,” many of these bonds are likely to be minimally or not affected at all by the Los Angeles fires, he said.