Catastrophe Futures Contracts

Multiple Choice

Catastrophe futures contracts

A) are designed to protect life insurance companies from the effects of natural disasters in which large numbers of lives are lost.
B) are designed to protect property-casualty insurers against the extreme losses that can occur in hurricanes.
C) are designed to hedge insurance companies from liability law suits.
D) provide a payoff when the actual loss ratio is less than the expected loss ratio.
E) provide a payoff to the seller of the contract that is equal to the loss ratio times the nominal value of the contract.