Aon Securities structures record-breaking quake cat bond for World Bank

Aon Securities has structured a record-breaking earthquake catastrophe bond for the World Bank, according to today’s announcements.

The investment banking division of global reinsurance intermediary and capital advisor Aon Benfield has assisted in structuring the largest ever catastrophe bond covering earthquake, providing the organisation with $1.36bn of capital markets protection.

The bond will offer World Bank protection in Chile, Colombia, Mexico and Peru against earthquake risk on a parametric basis.

This is the second largest catastrophe bond on record and represents the largest sovereign risk transfer in the history of the insurance-linked securities sector.

Swiss Re and Aon Securities are joint structuring agents for the deal, and Swiss Re, Aon Securities, and Citi are joint bookrunners. AIR Worldwide is the modeling agent and calculation agent in support of this transaction.

Paul Schultz, CEO of Aon Securities, said: “We are honored to support the Pacific Alliance members and World Bank in bringing this pioneering transaction to the market. This record-breaking issuance highlights the strategic partnership between nations seeking efficient sources of capital to fund emergency costs and investors seeking to invest in diversifying risks and support sustainable development initiatives. We are optimistic that this transaction will pave the way for other governments to develop more resilient risk management programs for their uninsured exposures.”