Danish Red Cross Issues Cat Bond through Guernsey ILS Structure

Guernsey Flag With Red And Yellow Cross

March 23, 2021 |

Guernsey Flag With Red And Yellow Cross

The Danish Red Cross has issued the first humanitarian catastrophe bond covering pure volcanic eruption through a Guernsey insurance-linked securities (ILS) structure.

The $3 million privately placed issue was brought to market by Replexus and Howden Capital Markets through a Guernsey-domiciled reinsurance structure, Dunant Re IC Limited, an incorporated cell of Replexus ICC (Guernsey) Limited, which is managed in Guernsey by Aon Insurance Managers. The bonds were settled using Replexus' blockchain-based ILS platform, ILSBlockchain.

The catastrophe bond, which covers the risk of eruption of 10 volcanoes across 3 continents, raised $3 million from specialist catastrophe bond investors, with the capital raised to be used to support humanitarian aid following an eruption. Initial investors in the volcano catastrophe bond included ILS specialist managers Plenum Investments, Schroder Investment Management, and Solidum Partners.

"We have been watching the development of this with great interest," Rupert Pleasant, Guernsey Finance chief executive, said in a statement. "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 Dr. Andy Sloan added in the 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 the 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."

March 23, 2021