LONDON (Reuters) – Investors in niche financial bonds that cover insurers against huge natural disasters are on alert for future events that could force them to pay out after the powerful tornado that struck the U.S. on Monday, brokers and fund managers said.

Catastrophe bonds are used by the insurance industry to transfer financial risks of extreme events like earthquakes or hurricanes, to investors, who receive an annual return in exchange for agreeing to cover damages they consider very unlikely..

There are six bonds which cover around $1 billion of tornado risk in the United States. These bonds were sold by Chubb , Country Mutual and North Carolina Farm Bureau, and the United Services Automobile Association (USAA).

According to fund managers assessing the tornado that hit the U.S. state Oklahoma on Tuesday, cat bond investors are unlikely to have to foot a share of the bill because the total cost of damage won't be high enough to trigger a payout.

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