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LONDON (Reuters) – Investors in niche financial bonds that cover insurers against huge natural disasters are on alert for future events that could force them to pay out after the powerful tornado that struck the U.S. on Monday, brokers and fund managers said.

Catastrophe bonds are used by the insurance industry to transfer financial risks of extreme events like earthquakes or hurricanes, to investors, who receive an annual return in exchange for agreeing to cover damages they consider very unlikely..

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