FTFM Severe flooding and extreme heat caused havoc for much of Europe in 2007, whether in Tewkesbury, England, or the Peloponnese region of Greece. But did the financial markets anticipate this pattern of unusual weather better than they did the tide of subprime mortgage blow-ups in the US?
If the markets timed it right, for example through bundling up projected revenue, earnings and insolvency risk in the form of weather derivative contracts, or exposure to catastrophe (cat) bonds, then weather, as an investable asset, delivered.
