RMS Launches Cat Bond Service
California catastrophe modeler Risk Management Solutions [RMS] — a leading provider of products and services to Bermuda’s reinsurance sector — today [Feb. 17] announced the launch of Miu Pricing.
The new service provides fixed income investors with everything they need to make investment decisions in both the new issue and secondary catastrophe bond markets.
“The Miu Pricing service aims to make catastrophe bonds and their associated data easier to digest by delivering the information to investors in a manner they’re familiar with — price and yield metrics adjusted for risk. Given how much risk changes due to seasonality and aging of the bonds, we believe Miu Pricing will highlight attractive risk-return opportunities in the secondary market for catastrophe bonds,” said Peter Nakada, managing director of RMS RiskMarkets.
For new issue bonds, the Miu Pricing service provides commentary on the structure of the bonds, as well as RMS’ view of the bond risk.
These are made available before the bond prices, to help investors with their investment decision.
For secondary market trading, Miu Pricing calculates risk-adjusted prices and yields – just like an option pricing simulation model for interest rates or equities.
The result is detailed risk-adjusted price/yield data for every catastrophe bond in the market. In addition, Miu Pricing provides revised price and risk metrics for investors immediately following a catastrophe event.
“We believe the Miu Pricing service will improve our existing Miu clients’ risk-return decisions, and will also help to open up the market to more mainstream fixed income investors who are just entering the asset class,” said Robert Stone, senior director of RMS RiskMarkets.
More than 400 leading insurers, reinsurers, trading companies, and other financial institutions rely on RMS models to quantify, manage, and transfer risk.
Founded at Stanford University in 1988, RMS serves clients today from offices in Bermuda, the US, the UK, France, Switzerland, India, China, and Japan.
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