You're not incorrect, but this is the same sort of risk you take when buying an index fund, just that index funds have 100x more entries, so are much more diversified. Eg, we could rewrite this about an index fund like:
"Yeah, but imagine how bad a day you're having if all of those [stocks drop] at once, and then as a cherry on top you [enter a recession]."
I'm not saying this is exactly like buying an index fund. I'm very un-knowledgable about CAT bonds. I'm just saying that your criticism holds for _every_ diversified bundle of risks.
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You're not incorrect, but this is the same sort of risk you take when buying an index fund, just that index funds have 100x more entries, so are much more diversified. Eg, we could rewrite this about an index fund like:
"Yeah, but imagine how bad a day you're having if all of those [stocks drop] at once, and then as a cherry on top you [enter a recession]."
I'm not saying this is exactly like buying an index fund. I'm very un-knowledgable about CAT bonds. I'm just saying that your criticism holds for _every_ diversified bundle of risks.