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Catastrophe Bonds. From Structure to Strategy – A Cluster Analysis at European Level

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  • Laura-Gabriela CONSTANTIN

    (Bucharest University of Economic Studies, Faculty of International Business and Economics, Romania)

Abstract

As a core activity and discipline of corporate management and corporate governance, risk management is, especially nowadays, a central part in pursuing the sustainable development desiderates, both from the perspective of the firm and of the society as a whole.Considering the negative impact natural catastrophes have on the companies’ and countries’ competitiveness, the development of sustainable financial products that make a contribution to transferring the risk and allocating the capital in case of disasters stands for a continual preoccupation, especially for the (re)insurance industry, while the study of catastrophe bonds – insurance-linked securities – is of interest in the specialized literature. In this context, the scope of the present research is to expand the empirical studies within this field while examining the link between the structure of the catastrophe bonds and the risk management approach employed while accessing the capital markets through this transactions.The methodology entailed clustering a selection of transactions developed by European cedents based on the size of each issue and correlating the results with an innovative score, developed to encompass several important catastrophe bonds structural components.The findings reflect that the general structural elements of the financial transactions reflect closely the corporate approach regarding the innovative risk intermediation instruments for the examined catastrophe bonds deals. The outcomes also emphasize, as expected, that companies with a stronger presence on this market seem to have a more sophisticated risk management approach.

Suggested Citation

  • Laura-Gabriela CONSTANTIN, 2014. "Catastrophe Bonds. From Structure to Strategy – A Cluster Analysis at European Level," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 17(2), pages 304-317, December.
    • Handle: RePEc:rom:econmn:v:17:y:2014:i:2:p:304-317
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    References listed on IDEAS

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    1. Marko Sarstedt & Erik Mooi, 2014. "The Market Research Process," Springer Texts in Business and Economics, in: A Concise Guide to Market Research, edition 2, chapter 2, pages 11-23, Springer.
    2. Tristan Nguyen & Joerg Lindenmeier, 2014. "Catastrophe risks, cat bonds and innovation resistance," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 6(1), pages 75-92, April.
    3. J. David Cummins & Mary A. Weiss, 2009. "Convergence of Insurance and Financial Markets: Hybrid and Securitized Risk‐Transfer Solutions," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(3), pages 493-545, September.
    4. Cummins, J. David & Doherty, Neil & Lo, Anita, 2002. "Can insurers pay for the "big one"? Measuring the capacity of the insurance market to respond to catastrophic losses," Journal of Banking & Finance, Elsevier, vol. 26(2-3), pages 557-583, March.
    5. J. David Cummins, 2008. "CAT Bonds and Other Risk‐Linked Securities: State of the Market and Recent Developments," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 11(1), pages 23-47, March.
    6. Marko Sarstedt & Erik Mooi, 2014. "A Concise Guide to Market Research," Springer Texts in Business and Economics, Springer, edition 2, number 978-3-642-53965-7, April.
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    Cited by:

    1. Liliana Nicoleta Simionescu, 2015. "The Gender Differences Effects On Corporate Social Responsibility (Csr)," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 3, pages 170-175, June.
    2. Irina-Eugenia Iamandi & Sebastian Mădălin Munteanu, 2014. "Corporate Social Responsibility through Education and Sport. An EU Comparative Case," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 17(54), pages 73-97, December.
    3. Loris Lino Maria Nadotti & Laura-Gabriela Constantin, 2014. "Catastrophe Bonds Structures at European Level – A Cluster Analysis Approach," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 17(54), pages 115-141, December.

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    More about this item

    Keywords

    catastrophe (cat) bond; cluster analysis; risk management; sustainable development.;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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