Pac-Coast Insurance (PCI)concentrates its underwriting activities in California.The company is concerned that if a catastrophic earthquake occurs,it might threaten the solvency of the company.To address this risk,PCI issued some debt securities.If a catastrophic earthquake occurs,PCI does not have to repay the borrowed funds or pay interest.The securities PCI issued are called

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The securities that PCI issued are called catastrophe bonds. These are a form of insurance-linked securities where the issuer (in this case, PCI) transfers the risk of a catastrophic event, such as an earthquake, to investors who buy the bonds. If the catastrophic event occurs, the investors lose their investment, but PCI does not have to repay the principal or interest on the bonds. This helps protect the company's solvency in the event of a major catastrophe.

Pac-Coast Insurance (PCI)concentrates Its Underwriting Activities in California