Willis Group Holdings P.L.C. has raised $55 million to support Africa's first catastrophe insurance pool, providing drought coverage for Africa Risk Capacity Insurance Company Ltd., Willis said Thursday in a statement.

Hamilton, Bermuda-based mutual insurer ARC Ltd. will be managed by Marsh L.L.C.'s captive solutions practice in Bermuda, Marsh said in a statement, also Thursday. ARC was created to provide coverage against drought to an initial group of five African countries — Kenya, Mauritania, Mozambique, Niger and Senegal — Willis said.

The aim of the ARC catastrophe insurance pool is to reduce African governments' reliance on external emergency aid, according to the Marsh statement. Germany and the United Kingdom contributed the initial $200 million in capital and are also founding members of the mutual.

The parametric insurance policies issued this month by ARC Ltd. will provide a total of $135 million in drought insurance coverage tailored to the specific requirements of the insured countries in addition to Willis' $55 million in order to cover the risks it is taking on from the participating countries, Marsh said in its statement.

“The underlying insurance policies issued by ARC Ltd. are cutting-edge index-based coverages, with parametric triggers tailored to reflect each country's specific rainfall requirements for growing staple crops,” David Simmons, Managing Director of Analytics at Willis Re, said in the statement. “This is one of the first times in Africa that the reinsurance process has become such a key instrument in achieving humanitarian and development goals.”

Teams from both Willis Re and Willis' Global Weather Risks Practice were involved in shaping the structure of ARC Ltd.'s reinsurance program, the company said in its statement.

“We noted significant appetite for this risk from both the reinsurance and index-based weather market, which were very keen to support something so innovative and ground-breaking,” Claire Wilkinson, partner with Willis' Global Weather Risks Practice, said in the statement. “Despite keen pricing, the core layers of the programs were around three times over-subscribed. It is heartening to see so much support from the reinsurance industry for a project that has the potential to do so much good.”