Benefits of an Event Linked Future

 1.  Largely eliminates counterparty risk because of the clearing system.

 2.  Permits access to wider sources of capital.

 3.  Permits new entrants to support the reinsurance market (investors, banks, hedge funds).

 4.  Enables Protection Buyers and Sellers to deal at reduced  transaction costs.

 5.  Offers cash flow advantages for Protection Buyers.

 6.  Offers capital economy for Protection Sellers.

 7.  Offers a means of hedging against insurance price volatility.

 8.  Offers a means of hedging future renewal prices.

 9.  Offers a means of hedging against losses caused by natural catastrophes other than US wind.

10. Allows US wind risk/price to be traded continuously.

Further details are described within ‘Trading Strategies’.