Two good example of this are catastrophe bonds and Entertainment Securitizations.

According to Standard & Poor's, hedge funds are the biggest buyers of catastrophe bonds.

Roughly $1.8 billion of catastrophe bonds were issued in 2005.

It also issues catastrophe bonds which transfer catastrophic risks from borrowers to investors.

But there is another way to supplement traditional reinsurance markets that has been attracting increasing attention: catastrophe bonds.

As a result, it will be cheaper for insurance companies to issue catastrophe bonds than to buy comparable reinsurance, according to a Lehman report.

Fitch said last week that more than $2 billion of catastrophe bonds were likely to be issued next year, double the typical amount.

Some insurers like catastrophe bonds because the deals create a pool of money that can be tapped immediately in a disaster.

These players are big enough to absorb a $5 million or $10 million loss on catastrophe bonds and go in for another round.

There is also light reading like an analysis of catastrophe bonds that may reduce risk for insurance companies.