Red Cross volcano cat bond issuance recognised for ESG credentials

The first parametric catastrophe bond covering pure volcanic eruption risk, which was brought to market by Replexus and Howden Capital Markets and for the Danish Red Cross has been recognised for its environmental, social and governance (ESG) credentials.

The Guernsey International Insurance Association (GIIA) has awarded its first environmental, social and governance (ESG) accreditation to an insurance entity and that entity is the Dunant Re IC Limited incorporated cell of Replexus ICC (Guernsey) Limited, the issuer of the volcano catastrophe bond earlier this year.

Operated and arranged by Cedric Edmonds, Founder and Director at Replexus ICC, while managed by Aon Insurance Managers (Guernsey), the vehicle has been recognised thanks to being the home to the first humanitarian catastrophe bond issuance.

Mark Elliott, Chair of the GIIA, commented, “GIIA is delighted with the response received from members in relation to our ESG Framework. This announcement of the first accredited entity under the framework is a testament to our ambition to position ourselves at the forefront of ESG standards. The time for real action and transparency is here and we congratulate the Red Cross, Dunant Re and Aon Insurance Managers on their achievement.”

Cedric Edmonds, Founder and Director at Replexus ICC, said, “I am delighted that the Red Cross-sponsored Dunant Re is the first entity to receive GIIA’s ESG kitemark and I hope, for the good of our world and generations to come, that this is merely the first of very many companies to receive this honour.”

Paul Sykes, Managing Director Aon Insurance Managers (Guernsey) Limited, also commented, “We are delighted to have supported Replexus and Dunant Re in becoming the world’s first ESG-accredited insurer under the GIIA kitemark. Through playing an important role in another world first, we demonstrate Aon’s continued commitment to both ESG and delivering innovation to our clients.”

The GIIA ESG framework was developed in collaboration with ESI Monitor and allows insurers and insurance managers who are members of GIIA to self-certify, and apply for a kitemark through a third-party accreditation process.

It embraces the United Nations’ recommended approach of incorporating ESG processes to align sustainable development goals with the outcomes of financial services products, services and investments made by the insurer, which the Danish Red Cross cat bond certainly achieves in abundance.

The volcano cat bond provides $3 million of cover on a parametric basis across the risk of eruption of 10 volcanoes over three continents, and if triggered the capital from specialist cat bond investors would be used to support aid in the aftermath of an eruption, by its sponsor the Danish Red Cross.