Swiss Re has launched Australia’s first ever catastrophe bond for natural catastrophes.

The international reinsurer has taken $US100 million ($134 million) off its books to sell to institutional investors in the capital markets.

The covered perils include earthquakes across Australia and tropical storms across Queensland.

The maximum aggregate amount permitted to be outstanding is $US250 million ($336 million).

Swiss Re said at a media briefing yesterday that the move will allow it to not only “back up existing capacity, but also create additional underwriting with no credit risk. Thus it can continue to write large shares of risks and supply the increasing demand in the Asian market, whereby extending its leadership position in Asia.”

Investors choosing to be part of the offer earn interest payments equal to the London inter-bank borrowing rate plus 4% if a natural disaster doesn’t strike Australia.

Australis – the name Swiss Re has given to the bond – is for a term of three years.