A niche within an already esoteric asset class, bonds that transfer the risk of extreme mortality from insurers to the capital markets represent just 6%, or $1 billion, of the roughly $15-$16 billion of catastrophe bonds outstanding.

Participants expect that mortality bonds will always remain a fraction of the broader cat bond market, which primarily transfers the risk of property damage from earthquakes, hurricanes and floods. It is easier to predict mortality rates than it is to predict where storms will hit and how much damage they will inflict. Therefore life insurers are less incentivized to seek re-insurance in the capital markets. 

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