As Los Angeles residents digested the apocalyptic scene left by wildfires earlier this year, the stage was simultaneously being set for hedge funds to pursue market-beating returns fanned by climate change.
The investment model in question is built around so-called subrogation claims, which are used by insurers to try to recoup some of the money they’ve paid out to policyholders. Insurers resort to subrogation when they suspect that a third party — a utility, for example — is ultimately responsible for the losses. But rather than deal with the recovery risk themselves, insurers have been