QBE has gained $US250 million ($285 million) of reinsurance cover by sponsoring its first catastrophe bond.

Aon Benfield Securities underwrote and placed the bond, issued by Bermuda-based special-purpose insurer VenTerra Re.

“We are very happy with the coverage and terms secured,” QBE Chief Reinsurance Officer Jim Fiore said.

The bond provides multi-year collateralised protection against US and Australian earthquakes and Australian cyclones for three years from January 1.

Aon Benfield Securities CEO Paul Schultz says coverage is “substantially similar” to what QBE has secured through traditional reinsurance, and the bond was well received by investors, who welcome a new sponsor to the market.

The bond is the first to secure Australian perils coverage for a primary insurance company on an indemnity basis, according to Aon Benfield Securities.

The VenTerra Re variable rate notes were priced at 3.75% above the yield on the underlying money market fund collateral. The notes are rated BB by Standard & Poor’s.