Pension funds, endowments, wealthy families and other large investors could be on the hook for a portion of damages caused by Hurricane Michael, particularly if the storm intensifies, the Wall Street Journal reported. The exposure for these large investors stems from their ownership in catastrophe bonds, which are issued by insurers or entities seeking insurance. The investors receive interest payments but can lose their principal if certain disasters occur. About $15.7 billion in outstanding catastrophe bonds have potential exposure to Florida, where Michael was set to make landfall, according to reinsurance broker Aon Securities. In addition to cat bonds, some of these investors also have exposure to hurricane risk through other types of insurance-linked securities.
