Cat Spread
Definition of "Cat spread"
Type of derivative traded on the Chicago Board of Trade that takes the form of an option on a catastrophe futures contract using a call-option spread as the basis for the contract. The thesis of this kind of derivative is to simulate an artificial layer of excess of loss reinsurance coverage. This derivative has the origin of its value in the excess of loss reinsurance plan to be used as a mechanism for the primary insurer hedging its risk coverage.
Popular Insurance Terms
Section of some inland marine insurance {transportation insurance) and many other property insurance policies excluding coverage for damage to shipped goods by vermin such as rats. ...
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Property damage, accident, or injury resulting from vagaries of nature, including tornadoes, hurricanes, and floods. ...
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Insurance coverage for the named insured and his or her eligible dependents. ...
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Personal property insurance that provides all-risks coverage for wedding presents, wherever they may be in the world, until they are permanently located. Because the new owners of wedding ...
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