The typical point of a hurricane bond is that it tends not to correlate with other investments so much. A reinsurer is going to need a lot of cash if a hurrican

The typical point of a hurricane bond is that it tends not to correlate with other investments so much. A reinsurer is going to need a lot of cash if a hurricane hits but the rest of the stock market likely won’t be very effected. If you’re a pension fund it reduces risk because the stock market going down is unlikely to affect your hurricane bonds and a hurricane is unlikely to affect your regular bonds/equities. However sometimes they are correlated. If you’re the WHO you might issue cat bonds that don’t pay out the principal if there’s a pandemic, and then you can use these to help surprise the next Ebola outbreak that affects some poor countries a lot but global markets little. But then if you have a global pandemic and everything is shut down, the pandemic bonds still keep the principal but the equity markets also go down a lot, which is not what the typical investor in those bonds would prefer.