Our Weather Derivatives (Hurricane Futures) have been designed in close cooperation with market participants. Hurricane Futures provide potential investors like asset managers, hedge funds, banks and (re)-insurance companies with a straightforward opportunity to trade or hedge insured losses related to specific storm events. Hurricane insured losses are largely uncorrelated to financial market returns, providing a further diversification tool.

The financial crisis has led to a re-evaluation of bilateral risk, creating demand for centrally cleared hurricane contracts to complement currently bilaterally executed ISDA documented hurricane swaps. Our offering accommodates this need by providing central clearing services through Eurex Clearing which brings effective risk management to the market and mitigates counterparty risks. Furthermore, our contracts offer the traditional benefits of listed futures such as standardization and anonymity.

Eurex Hurricane Futures are available for three regional areas (all contracts USD-denominated):

• USA (all 50 states including the District of Columbia, Puerto Rico and US Virgin Islands)
  
• Florida (State of Florida) and
  
• The coastal states of the Gulf region (States of Alabama, Louisiana, Mississippi and Texas)
  

How do Hurricane Futures work?

If the estimated amount of insurance losses exceeds the trigger level, the contracts will be settled at USD 10,000 due to their binary character. If the amount of insurance losses is lower than the trigger level, the contract effectively expires worthless at USD 0.10. With regards to the calculation of the insurance losses, Eurex uses data provided by ISO’s (Insurance Services Office) Property Claim Service^®, the only internationally recognized estimate centre for disaster-related insurance losses in the U.S.