Cat Bond for Extreme events (Financial Modeling and Analysis)

This paper investigates the applicability of Catastrophe Bonds to natural disaster such as Nankai trough tsuname, which might be more than 20 meters hight of waves to west half of Japan in near future. In Japan there were serious disasters as Kobe earthquake, EastJapan earthquake which caused not only human casualty but also economic destruction. The economic burden to recover from disaster is depending on Government bonds which are to be paid by the future generation. The Cat bonds is a kind of insurance which the present generation can pay in the occasion of catastrophe