Super Cats as Alternative Investments
Posted: 27 Jul 2005
This paper introduces the concept of super catastrophes, or Super Cats, as alternative investment opportunities. By way of the recent Pepsi Play For a Billion sweepstakes case we present a methodology for valuing Super Cats with a reasonable margin of safety. The methodology combines insurance and value investing theory in a way that, to the best of our knowledge, has never before been presented. After the case discussion, general guidelines are presented that could prove useful in future alternative Super Cat investments.
Keywords: Alternative investment, valuation, risk transfer
JEL Classification: D46, G13, G31
Suggested Citation: Suggested Citation