Seismic Catastrophe Bond Analysis And Empirical Research

China contains vast territory and abundant resources,but it is also one of the countries that have the most natural disasters in the world.The average annual earthquakes,floods and other catastrophic events are far exceeded the world's average.As the economy is getting better,the wealth concentration of an unit area will increase and the loss brought by the catastrophe will increase as well.A larger proportion the annual GDP growth would be engulfed by catastrophe losses.The traditional insurance and reinsurance industry are facing serious challenges,and it is very difficult to pay for the catastrophe risk.Also in our country,we take the government as the leader and use the national finance to support the disaster recovery.This can only meet the basic needs of after the catastrophe,and it seems to be insufficient in the face of problems such as post-disaster reconstruction and the resumption of production.Therefore,it is necessary to establish a catastrophe risk diversification mechanism to help the country reduce the financial burden and help the victims to recover their homes.So catastrophe bonds were born.Firstly,this paper proves the rationality of the demand and supply of catastrophe risk bonds from the perspective of microeconomics and its the risk characteristics.Then,we analyze various important factors that influence demand and supply.In addition,we analyze the cases of US,Japan and Taiwan,compare and summarize their characteristics,and think about what should we learn from them.To quantify the catastrophe risk is the premise and foundation of all bond work.Therefore,starting from the use of the model,this paper explains the objective of catastrophe risk model and how to build it.And we also analyze the challenges we may encounter when doing the modeling.The operation mode of catastrophe risk bonds is the various combinations of subjects and their various forms in the process of bond operation.It is an indispensable part of the study of catastrophe risk bonds,and it plays a guiding role in the actual operation.This paper analyzes the participating subjects,standard results,triggering mechanism,credit rating and distribution shares of catastrophe bonds.Pricing is the key and difficulty of catastrophe bond.This paper analyzes the key factors affecting pricing,and makes a comprehensive analysis of multiple pricing models and methods.The foothold of any theoretical study is empirical analysis,and so is the seismic bond.All the theories are meaningful only if they are verified in practice.This paper makes an empirical analysis of catastrophe bonds based on the seismic loss data of China and fit earthquake disaster loss data from 1969 to 2016 using the moment estimation method.According to CAPM model,we could calculate the yield of earthquake bonds and obtain the seismic bond prices of different principal arrangements and maturities.It is the extension and application of all theoretical research,which is important to guide the practice.At the end of the paper,the author summarizes the article.And based on the real condition of China,the author puts forward some suggestions for improving the existing catastrophe bond market in China by learning from the advanced experience of foreign countries.