Schroder, Aon among participants in first volcano CAT bond cleared on blockchain

The first humanitarian catastrophe bond covering pure volcanic eruption has been completed using a an insurance-linked securities (ILS) structure. A $3 million privately-placed issuance, sponsored by the Danish Red Cross, has been brought to market by Replexus and Howden Capital Markets through a Guernsey-domiciled reinsurance structure, Dunant Re – an incorporated cell of Replexus, which is managed in Guernsey by Aon Insurance Managers.

The bonds were settled using Replexus’ unique blockchain-based ILS platform, the ILSBlockchain. The catastrophe bond covers the risk of eruption of 10 volcanoes across three continents and raised $3 million from specialist cat bond investors, with the capital set to be used to support humanitarian aid in the aftermath of an eruption. Initial investors in the volcano cat bond included ILS specialist managers Plenum Investments, Schroder Investment Management and Solidum Partners.

Guernsey Finance chief exec Rupert Pleasant said in a statement: “We have been watching the development of this with great interest. What a great result for the Danish Red Cross, Replexus and for Guernsey – this is a world first and truly unique example of sustainable finance in the humanitarian market.”

Guernsey Green Finance chair Andy Sloan said in a statement: “Guernsey’s leadership and innovation across ILS, technology and sustainable finance was absolutely central to this bond issuance, which provides opportunity for investors to support NGOs responding to different types of CAT risk.”

Paul Sykes, managing director at Aon, said in a statement: “We are excited to have been involved in another first for the ILS market supporting Replexus on the establishment and management of Dunant Re IC Limited. The transaction demonstrates Guernsey’s credentials in the ILS and Sustainable Finance space which we expect to grow significantly in the future.”


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