Reinsurance and CAT bonds are two alternative risk management instruments used by insurance companies. Insurers should be indifferent between the two instruments in a perfect capital market. However, the theoretical literature suggests that insured risk characteristics and market imperfections may influence the effectiveness and efficiency of reinsurance relative to CAT bonds. CAT bonds may add value to insurers’ risk management strategies and may therefore substitute for reinsurance. Our study is the first to empirically analyse if and under what circumstances CAT bonds can substitute for traditional reinsurance. Our analysis of a comprehensive data set comprising U.S. P&C insurers’ financial statements and CAT bond use shows that insurance companies’ choice of risk management instruments is not arbitrary. We find that the added value of CAT bonds mainly stems from non-indemnity bonds and reveal that (non-indemnity) CAT bonds are valuable under high reinsurer default risk, low basis risk and in high-risk layers.

再保险和CAT债券是保险公司使用的两种替代风险管理工具。在完美的资本市场中，保险公司应该对这两种工具无动于衷。然而，理论文献表明，保险风险特征和市场不完善可能会影响再保险相对于 CAT 债券的有效性和效率。CAT 债券可为保险公司的风险管理策略增加价值，因此可替代再保险。我们的研究是第一个实证分析 CAT 债券是否以及在什么情况下可以替代传统再保险的研究。我们对包含美国财产险保险公司财务报表和 CAT 债券使用情况的综合数据集的分析表明，保险公司对风险管理工具的选择并非随意。