Lloyd’s: London Bridge ILS issuance hits $750m with Beazley’s debut nat cat bond
London Bridge 2 PCC Limited and its predecessor, together the Lloyd’s insurance-linked securities (ILS) platform, hit $750 million in aggregate issuance of ILS securities to investors thanks to the recent completion of Beazley’s first natural catastrophe bond, the $100 million Fuchsia 2023-1 transaction.
As we had reported through the catastrophe bond’s marketing and issuance, Beazley, the London headquartered specialty insurance and reinsurance underwriter, successfully secured a targeted $100 million in natural catastrophe reinsurance from what was actually its first ever Rule 144A property catastrophe bond.
While Beazley also sponsored a 144A cyber cat bond at the end of last year, the London Bridge 2 issued Fuchsia 2023-1 was actually the first of the pair of deals to settle.
It is the first 144A catastrophe bond to be issued through the Lloyd’s sponsored risk transformation platform London Bridge 2 PCC Limited.
Beazley secured multi-year indemnity reinsurance protection for named storm and earthquake events affecting the United States, Canada and parts of the Caribbean through the Fuchsia cat bond deal.
The $100m of notes issued by London Bridge 2 PCC cover Beazley’s Lloyd’s syndicates (623, 2623 and 3623), its North American insurance company (Beazley Excess and Surplus Inc.) and its European carrier (Beazley Insurance DAC).
Including the Fuchsia cat bond, the London Bridge ILS platform sponsored by Lloyd’s has now issued and brought an aggregate US $750 million in securities to institutional investors, across 13 cells, Lloyd’s revealed today.
Other London Bridge transactions have been focused on quota share arrangements, to enable investors to channel funding to Lloyd’s syndicates and members in an efficient and aligned manner.
The Fuchsia 2023 cat bond is the first excess-of-loss reinsurance arrangement to be transacted via the London Bridge 2 structure, we believe.
As we reported, Beazley’s $100 million of Fuchsia 2023-1 catastrophe bond notes, issued by London Bridge, were eventually priced at the top-end of initial guidance.
Burkhard Keese, Lloyd’s Chief Financial Officer, commented on the news, “We are very pleased to see the efficient close of the first excess of loss cat bond transaction by London Bridge 2. This is another important milestone for this strategically important risk transformation vehicle for the Lloyd’s market and reaffirms the flexibility this vehicle has, provided by its regulatory permissions. We are delighted that Beazley has been the pioneer for this new issuance, which confirms our belief that the UK market, and Lloyd’s in particular, is a great place for institutional investors to gain access to global (re)insurance risk.”
Adrian Cox, CEO of Beazley plc, added, “Beazley is delighted to be sponsoring the first 144A property catastrophe bond utilising the London Bridge platform. We were impressed with the smooth and efficient way that an ILS transaction can be issued out of the UK market and we are grateful for the support received from Lloyd’s and Artex throughout the process.”
Richard Pennay, CEO ILS of Aon Securities, also said, “We are proud to have acted as sole structuring agent and bookrunner on not only the inaugural excess of loss catastrophe bond by London Bridge 2 but importantly Beazley’s first property catastrophe bond transaction. From a transaction timeline perspective, the use of the UK PCC allowed for a seamless and efficient execution timeline and was well received by the investor community”.
Colin Scagell, Partner at Mayer Brown, further states “On behalf of the Mayer Brown team it was a pleasure to work with Beazley and the rest of the advisers to bring this first-in-kind transaction to market and we hope it offers a roadmap to other sponsors to consider using the London Bridge structure.”
You can read all about this London Bridge 2 PCC Limited (Fuchsia 2023-1) catastrophe bond transaction in our Deal Directory, where you can analyse details of almost every cat bond ever issued.
