In this vein, one of my favorite financial vehicles is a catastrophe bond[0]. They are essentially short term debt instruments that pay a coupon normally, but in the event of a specified disaster, forgive the principal (thus removing the liability from the bond issuer's balance sheet).
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.
Economically speaking, (bank) loans and bonds are almost the same thing.
There's a bit of a legal difference. And bonds are expected to be traded relatively easily, but your creditor selling your loan to someone else is not quite as common.
A re-insurer is someone who insures insurance companies. Many insurance contracts for you as an individual have you pay for the first few (thousand..) dollars of damage, and the insurance companies covers everything afterwards.
Of that liability, insurance companies cover the first few (million) dollars of damage, and often pass on the excess liability afterwards to yet another specialised company. The re-insurer.
Catastrophe bonds are a way for bond investors to take the liability that would normally go to re-insurers. Of course, in return for taking on some liability, they get paid. Just like you pay your insurance company a premium.
[0]: https://en.wikipedia.org/wiki/Catastrophe_bond