Much of the theoretical basis for current monetary and financial theory rests on the economic efficiency of financial …

transferring risk are being explored. The paper studies several recent transactions by USAA which use reinsurance capacity from … demonstrate that both features deviate from what theory would predict, yet are characteristic of many transactions, not simply …

risky investment, underwriting, reinsurance, and hedging; and ii) the allocation of risk across all of these opportunities …

with natural hazards, such as hurricanes and earthquakes. Risk management theory suggests protection by insurers and other … relatively little cat reinsurance against large events. We also find that premiums are high relative to expected losses …, especially after cat events. We then examine clinical evidence to understand why the theory fails. Specifically, we examine …

supply of intermediary capital is perfectly elastic. We take the US catastrophe reinsurance market as an example, using … results suggest that the price of reinsurance generally exceeds fair' values, particularly in the aftermath of large events …

but systematic mispricing is not. The theory is consistent with several empirical findings regarding the cross-section of …