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CATASTROPHE REINSURANCE SWAP Definition & Legal Meaning

Definition & Citations:

A synthetic financial SWAP that provides one of the contracting parties with a cash inflow in the event of loss from a defined catastrophic event. In exchange for the contingent CASH FLOW, the second party receives an upfront fee. Although the swap assumes the function of standard INSURANCE or REINSURANCE, the underlying documentation is often simpler and more flexible to negotiate. See also PURE CATASTROPHE SWAP.

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