A catastrophe bond (cat bond) is how an insurer or reinsurer sells a defined slice of disaster risk, US hurricanes, Japanese quakes, European windstorm, to the capital markets instead of buying traditional reinsurance. It converts a "tail" event that might destroy a balance sheet into a tradable security with a coupon. The market is large and growing: outstanding cat bonds reached roughly $55 billion by mid-2025, with record 144A property-cat issuance of about $16.6 billion in 2024.