Case | HBS Case Collection | 1998 (Revised from original 1997 version)

Mid Ocean Limited: Trading Catastrophe Index Options

by Kenneth A. Froot and Markus Mullarkey

Abstract

An insurance industry executive must evaluate the potential of a set of newly-offered catastrophe insurance derivatives. The background addresses the roles of traditional reinsurance and securitization efforts in providing risk transfer and risk financing in the "cat" insurance field. The benefits and difficulties involved in commoditizing a new asset class are explored as well.

Keywords: commodity market; derivatives; Insurance; Capital Markets; Natural Disasters; Risk Management; Financial Management; Financial Strategy; Performance Evaluation; Insurance Industry; Bermuda;

Citation:

Froot, Kenneth A., and Markus Mullarkey. "Mid Ocean Limited: Trading Catastrophe Index Options." Harvard Business School Case 298-073, March 1998. (Revised from original December 1997 version.)