LONDON (Bloomberg) — ICAP, the world's largest broker of deals between banks, and insurance company Jardine Lloyd Thompson arranged their first catastrophe swap transaction since forming a joint venture 10 months ago.

The contract is designed to insure against damage related to North American windstorms, the London-based companies said yesterday. A catastrophe swap typically involves an investor getting regular payments from an insurer in exchange for taking on the risk of covering losses linked to natural disasters including earthquakes and windstorms.

"Since announcing the joint venture in February, JLT and ICAP have made significant progress in developing a platform to foster liquid trading," said Dominic Burke, CEO of Jardine Lloyd Thompson.

The market for insurance-linked debt such as "cat" bonds may grow to as much as $350 billion outstanding by 2016 from about $26 billion in last year, according to Swiss Reinsurance. ICAP and Jardine Lloyd, the UK's second-biggest publicly traded insurance broker, formed the venture to buy and sell derivatives and securities linked to the insurance markets.

Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates.