AXIS targets lower price for first cyber cat bond, Long Walk Re

Specialty re/insurer AXIS Capital is now aiming to tighten the issuance pricing for the first 144a cyber catastrophe bond to hit the market, targeting a lower than guidance price for its still $75 million Long Walk Reinsurance Ltd. (Series 2023-1) transaction, Artemis has learned.

The targeted issuance date has slipped by a fortnight though, as issuance of the first ever 144a cyber cat bond has taken a little longer than originally anticipated.

But that’s no surprise, as this is a new peril to the full cat bond marketplace and so time is required to get investors and ILS managers comfortable with the risks and modelling on offer.

In this case though, it appears AXIS Capital has generated sufficient demand to seek a tightening of the price, from its original guidance, we’ve been told.

Recall that, AXIS entered the cat bond market with the first 144a cyber cat bond deal back around the middle of October, as we reported on the 18th of the month.

Using special purpose vehicle Long Walk Reinsurance Ltd., AXIS was targeting an issuance of at least $75 million of notes to provide cyber reinsurance coverage across its main underwriting subsidiaries, to protect them against what are being termed systemic cyber events, on an indemnity trigger and per-occurrence basis, over a two year term, beginning from the start of 2024.

The still $75 million of Series 2023-1 Class A notes that Long Walk Reinsurance Ltd. is offering have an initial expected loss of 1.97% and were first offered to investors with spread price guidance of 10%.

Originally, this first full cyber catastrophe bond had been aiming for completion next week, but now we’re told that pricing will be next week and settlement not until November 28th, so slipping by roughly a fortnight.

But it could be well worth the wait for AXIS, as we understand that the notes now have updated guidance, for a spread of between 9.5% and 10% to be paid to investors, so the notes could price lower than the original target.

That would be an exceptionally strong result for AXIS and send a very strong signal to those other sponsors looking to the catastrophe bond market as a possible source of cyber reinsurance and retrocession protection.

However, even if this first Rule 144a cyber cat bond prices at the original guidance, which appears almost assured, that is still a strong result as it signals cat bond market acceptance and a chance for others to participate, as a new peril enters the market.

We will update you when we learn of the final pricing.

You can read all about this first 144a cyber catastrophe bond Long Walk Reinsurance Ltd. (Series 2023-1)and details of every other cat bond in our extensive Artemis Deal Directory.