March 4, 2024


Massimo Figna, founder and CEO of hedge fund management firm Tenax Capital, explained in an interview with a local Italian daily that Italy would benefit from the use of catastrophe bonds due to the extremely low insurance penetration. , he believes investors will “snap up” cat bonds.

Maximum Hardship CapitalTenax Capital, a London-based investment management firm founded by Figna, offers UCITS catastrophe bond strategies to its investor clients.

Italy’s main daily il Fatto Quotidiano recently interviewed Figna to ask him his opinion on insurance penetration in the country amid recent catastrophic flooding and severe weather losses in the north.

Figna emphasized that Italian citizens are generally underinsured, with perhaps only 5% having insurance against catastrophic losses from earthquakes and floods.

Citizens often assume that the state steps in after a catastrophic event and allocates funds for recovery, but in general these funds are not enough to get people healthy again after severe weather or disaster losses.

“Arguably, to improve economic efficiency and allocate less capital, the state could sponsor reinsurance, for example through catastrophe bonds,” Finia explained.

“Italian risk catastrophe bonds will help fill this coverage gap and spread a culture of prevention, where we have been lagging behind,” he said.

Asked if he would invest in Italian catastrophe bonds, he said: “I probably would, and others might as well.”

Investors are looking for opportunities to diversify as the cat bond market focuses primarily on danger in the U.S., he explained.

“That’s why I’m convinced that if Italian risk had a cat bond, it would be snapped up,” he said.

He went on to explain the benefits of encouraging a culture of risk protection and risk transfer downward from government.

“If the Italian government sponsors catastrophe bonds, it will not only increase the ability to provide assistance to the population immediately after an event without burdening the Treasury, but it will also indirectly accustom citizens to dealing with the protection of their assets, thereby increasing the A context of great uncertainty and increasingly frequent natural risks favors necessary cultural progress,” Finia told the paper.

Asked whether insurance should be made mandatory in Italy, he noted that it could prompt insurers to use tools such as catastrophe bonds more.

For the same reason, the state should now consider it, as it acts as an insurer of last resort and “should mitigate risk by issuing bonds, etc.”

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