Munich Re has sold a $500 million catastrophe bond to protect two North Carolina underwriting associations against hurricane losses as insurers increasingly choose to cover risks with bonds rather than buying traditional reinsurance.
Insurers and reinsurers use so-called "cat bonds" to transfer major risks such as storms and earthquakes to bond market investors, freeing up their capital to underwrite new insurance business.
The cat bond sector ended 2012 with more than $6 billion in sales – the second highest in the history of the market.
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