Catastrophe Bonds Look Set to Dodge Losses as LA Fires Rage (1)

The wildfires sweeping through Los Angeles are unlikely to trigger significant losses for catastrophe bonds designed to capture such risks.

Roughly 12% of the $50 billion cat-bond market is currently exposed to wildfire risk, according to Florian Steiger, chief executive officer of Icosa Investments AG, a Swiss-based investment firm. Even in an “extreme scenario,” many of these bonds are likely to be minimally or not affected at all by the Los Angeles fires, he said.

Twelve Capital, another cat-bond fund manager, told clients in a note published on Thursday that “the majority of insured losses are expected to ...