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Eye of the storm

Catastrophe bonds are proving a popular choice among yield-hungry investors, and issuers are taking steps to adapt their products to meet investor need. Oliver Holtaway exploresthe prospects for the nascent sector's growth

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Mainstream investors are turning to the catastrophe bond market as they become more inventive in their search for yield and diversified exposure. Even 2002’s record issuance of $1.2 billion has not satisfied investor demand.

Initially, catastrophe bonds were bought and sold almost wholly by insurers and reinsurers. But now an estimated 100 investors have bought into the asset class –

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