The very first catastrophe bond covering pure volcanic eruption risk has now been completed, with a $3 million privately placed issuance backed by leading cat bond investors for the Danish Red Cross. The catastrophe bond covers the risk of eruption of 10 volcanoes across three continents and we’re told raised $3 million from specialist cat bond investors, with the capital set to be used to support aid in the aftermath of an eruption by sponsor the Danish Red Cross.

Initial investors in the volcano cat bond included insurance-linked securities (ILS) specialist managers Plenum Investments, Schroder Investment Management and Solidum Partners.

Issued using Guernsey domiciled Dunant Re IC Limited, the volcanic eruption catastrophe bond features a parametric trigger based on plume heights, as anticipated.