Aon Securities says it has structured a record $US1.36 billion ($1.74 billion) earthquake catastrophe bond for the World Bank, providing coverage for Chile, Colombia, Mexico and Peru.

The bond represents the largest sovereign risk transfer in the history of the insurance-linked securities sector, Aon says.

The issuance, across five tranches of notes, provides cover of $US500 million ($640 million) for Chile, $US400 million ($512 million) for Colombia, $US260 million ($333 million) for Mexico and $US200 million ($256 million) for Peru.

A parametric trigger for the cover is based on US Geological Survey data.

“We are optimistic this transaction will pave the way for other governments to develop more resilient risk management programs for their uninsured exposures,” Aon Securities CEO Paul Schultz said.

The four countries jointly approached the World Bank in 2016 to explore obtaining insurance through a catastrophe bond.