act of god bond meaning
A bond issued by an insurance company, linking principal and interest to the company's losses due to natural disasters.
- Why would you want to buy an Act of God bond?
- Alternatively, a disaster could produce an automatic conversion of these act of God bonds into the insurer's stock.
- So far, Nationwide Mutual Insurance Co . of Columbus, Ohio, is the only insurer to issue act of God bonds.
- In their simplest form, act of God bonds are issued by an insurance company with the repayment terms linked to the company's losses from disasters, or acts of God.
- Robert J . Arvanitis, senior vice president at Guy Carpenter, noted that investors might be more comfortable buying bonds if they could spread their risk by purchasing the act of God bonds of various insurance companies whose exposures are in different places.