CME HURRICANE INDEX FUTURES AND OPTIONS

Carvill and Chicago Mercantile Exchange (CME), the largest and most diverse derivatives exchange in the world, have joined together to develop insurance and reinsurance related hurricane derivatives.

CME licensed the Carvill Hurricane Index (CHI) in 2007 to offer futures and options on futures contracts on hurricane activity affecting the US coastline. Carvill’s ReAdvisory team tracks and calculates hurricane activity and provides additional ways to help address the needs of the insurance industry and other markets.

With these hurricane contracts, insurers and others will be able to transfer their risk to the capital markets and thereby increase their capacity to insure customers. In addition to insurers, other customers such as energy companies, pension funds, state governments and utility companies will be able to hedge their risk of hurricanes striking in six areas of the US defined as the Gulf Coast, Florida, the Southern Atlantic Coast, the Northern Atlantic Coast, the Eastern US and CHI-Cat-In-A-Box-Galveston-Mobile.

For further information, go to www.cme.com/hurricane

"The challenge was to develop an index which met the needs of both the derivatives trading community and the insurance market.  It needed to be easily understood, simple to calculate and based on publicly verifiable data - in short, an index which is transparent”,

Dr Steve Smith,
Senior Vice-President ReAdvisory