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How insurance risk is transformed into investable assets
Riskvest identifies, organizes, and spotlights opportunities for retail investors to gain exposure to insurance linked investments.
Keen observers will notice that we've successfully transformed the insurance risk into a limited liability product- you can no longer owe additional capital beyond your original investment. That said, the stated probability of default for these bonds is typically 1-3%, meaning the 5-9% excess returns above risk-free rates are designed to compensate for this low-probability but high-severity risk. Referring back to the chart at the beginning of the article, those extremely remote loss scenarios have exceedingly low likelihood of happening for a sufficiently large and diverse insurance company.
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