What is CATASTROPHE REINSURANCE SWAP?

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.

More On This Topic



Link to This Definition
Did you find this definition of CATASTROPHE REINSURANCE SWAP helpful? You can share it by copying the code below and adding it to your blog or web page.
Written and fact checked by The Law Dictionary