(Reuters) - Britain’s Pool Re, which helps insurers pay out claims on property damage caused by terror or militant attacks, said on Tuesday it had placed a £75 million bond in the capital markets to cover insured losses from such attacks.
The reinsurance fund, set up in 1993, acts as a backstop to insurers paying out claims on property damage and business interruption. It is financed by the insurance industry with government backing, and pay outs depend on the British government deeming an attack to be terror-related.
The bond, the first of its kind globally and oversubscribed by capital markets, covers physical damage from chemical, biological, radiological and nuclear and cyber attacks, Pool Re said.
Pool Re also said the insurance-linked securities contract was part of an economic buffer with £8.9 billion of protection for Britons against losses from such attacks.
Following attacks in London and Manchester in 2017, businesses lost revenue due to police cordons which restricted access, even though their property was not harmed.
In recent years, investors have shown a growing interest in catastrophe bonds to diversify portfolios away from asset classes, which are vulnerable to economic cycles and instead invest in bonds related to the risks of natural disasters like hurricanes in Florida and earthquakes in California and Japan.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Bernard Orr