Some hedge funds that buy cat bonds even helped capitalize start-up Bermuda reinsurance firms.

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Typical double-B Cat bonds have rates five points above Libor, compared to three to four for corporate bonds.

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In the past, cat bonds were available only to large institutions, which typically acquired them directly from insurance companies.

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But since 1997, none of the 59 Cat bonds issued has hit its trigger, even those covering Florida hurricane damage last year, when four storms battered the peninsula in rapid succession.

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Until recently, the market for cat bonds was minuscule.

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