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
Separate trust established by a charitable entity whose purpose is to receive contributions from numerous donors. All the donors' contributions are commingled. Each donor can retain a ...
Income paid under a disability policy that is not covered under workers compensation benefits. It is usually expressed as a percentage of the insured's income prior to the disability, but ...
number of serious injuries per 1,000,000 employee-hours worked. ...
a contract in life insurance that includes elements of whole life and term insurance. in pensions, a combined life insurance policy and a side (auxiliary) fund to enhance the amount of a ...
Bonds issued by the United States Treasury that pay a semiannual interest rate tied to the Treasury auction plus an additional interest rate tied to the rate of inflation during this ...
Trade association whose objective is to further the interests of its membership, as well as to inform the public on the role of its members. ...
Method of establishing rates in which the current year's premium is calculated to reflect the actual current year's loss experience. An initial premium is charged and then adjusted at the ...
Disability in which a wage earner is forever prevented from working because of injury or illness suffered. ...
Coverage, in liability insurance, for harm suffered by others because of events occurring while a policy is in force, regardless of when a claim is actually made. ...
Have a question or comment?
We're here to help.