Europe's largest insurer, Axa-UAP, and Banque Paribas have teamed up to shift insurance risk to capital market investors by issuing 'catastrophe bonds'.
The insurer and the French investment bank have recently formed a joint venture - Axa Paribas Alternative Risk Finance - to tailor-make products that effectively cover risks faced by corporates.
Conducting its first roadshow in Asia, the chief executive of the joint venture, Marc Romano, said it offered cash flow and liability management and developed new products which tapped into capital markets.
Since its inception in June this year, the company has done two private placements on catastrophe bonds, which pay lower returns when natural disasters strike.
One of the placements was done in Tokyo.
'What is attractive about the bonds is that the bonds' performance has no correlation to the ups and downs of the financial markets,' he said.
With a different risk profile, catastrophe bonds can be used by asset managers as a tool to diversify portfolios.