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Investors Cash In on Ebola Bonds That Haven't Paid Out

  • World Bank insurance vehicle pays out under complicated rules
  • Bonds had been hailed as a way to fight disease with finance
A health worker checks a boy’s temperature in Goma.
A health worker checks a boy’s temperature in Goma.Photographer: Pamela Tulizo/AFP via Getty Images

A new way of financing the fight against global diseases lured investors with annual returns of more than 11%. The deadly Ebola outbreak in Africa is highlighting shortcomings of so-called pandemic bonds in halting contagions.

After the worst Ebola outbreak on record, the World Bank two years ago began selling the high-yielding securities, modeling them on catastrophe bonds that pay out in response to insurance claims for events like hurricanes. The pandemic bonds, the first ever, are triggered by patterns in deaths from infectious diseases.