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Brian Chappatta

The Catastrophe Bond Business Is Booming

Surging issuance protects insurers while investors reap profits.

A storm doesn’t always wipe out profit.

A storm doesn’t always wipe out profit.

Photographer: Luke Sharrett/Bloomberg

Leave it to catastrophe bonds to be among the most well-functioning debt markets out there.

Issuance of “cat bonds” has climbed to more than $11 billion this year, about the same as this time in 2017, when sales hit a record, according to data compiled by Bloomberg. The debt helps protect insurers from potentially massive costs tied to damage from hurricanes, floods or other natural disasters. That’s important given that Hurricane Florence has strengthened into a Category 4 storm barreling toward the U.S. East Coast, with top winds reaching 130 miles (209 kilometers) an hour.