Investigators from University of Milano-Bicocca Release New Data on Climate Change (Climate change implications for the catastrophe bonds market: An empirical analysis)

2019 OCT 22 (NewsRx) -- By a News Reporter-Staff News Editor at Climate Change Daily News -- A new study on Climate Change is now available. According to news reporting out of Milan, Italy, by NewsRx editors, research stated, “Since their introduction in the mid-1990s, the return per unit of risk or multiple on catastrophe (cat) bonds has steadily declined. This paper investigates whether this pattern is consistent with the historical evolution of natural disaster risk, using average multiple figures over the period 1997-2017.”

Our news journalists obtained a quote from the research from the University of Milano-Bicocca, “Assessing the accuracy of cat bond pricing is important, since about 50% of outstanding risk capital in the cat bonds market is currently exposed to Atlantic hurricanes -a risk that global warming, among other disruptions, is found to enhance- and pension and mutual funds in European and other OECD countries currently own about 30% of the market. In this respect, while our findings suggest that falling multiples are primarily related to the Fed’s expansionary monetary stance and to portfolio shift effects, we do also find evidence of significant undervaluation of global warming risk in the cat bonds market. This finding, also in light of the unfailing appetite of institutional investors for such securities, casts doubts over the sanity of the market and over cat bonds as suitable investment products for risk averse investors.”

According to the news editors, the research concluded: “Sounder investment opportunities might be found in the green bonds market, which allows for the funding of immediate investment in climate change mitigation too.”

For more information on this research see: Climate change implications for the catastrophe bonds market: An empirical analysis. Economic Modelling, 2019;81():274-294. Economic Modelling can be contacted at: Elsevier, Radarweg 29, 1043 Nx Amsterdam, Netherlands. (Elsevier - www.elsevier.com; Economic Modelling - http://www.journals.elsevier.com/economic-modelling/)

Our news journalists report that additional information may be obtained by contacting C. Morana, University of Milan, Ctr European Studies CefES, Milan, Italy.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.econmod.2019.04.020. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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