Beazley cyber cat bond hits the market, $75m PoleStar Re Ltd.
Beazley, the London headquartered specialty insurance and reinsurance underwriter, has now entered the 144A catastrophe bond market with its first cyber deal, seeking $75 million in reinsurance from this PoleStar Re Ltd. (Series 2024-1) cyber cat bond issuance, Artemis can report.
We exclusively reported back in October that Beazley was expected to come to market with its first full 144A cyber cat bond before the end of this year.
Beazley had already sponsored three private cyber catastrophe bonds so far this year, but we were told that a renewal of the coverage would likely come in full 144a cat bond form, and this new PoleStar Re cyber cat bond appears to be that deal.
The private cyber cat bonds, the Cairney series of insurance-linked securities (ILS), have together provided Beazley with an aggregate $81.5 million of cyber reinsurance protection that runs to the end of this year.
We understand that Beazley aims to at least replace that, if it can, and this PoleStar Re 2024-1 cyber cat bond launches with a $75 million or greater target, we can now report.
PoleStar Re Ltd. has been established in Bermuda for the issuance of catastrophe bond notes for Beazley, we understand, with a single tranche of Series 2024-1 notes on offer this time.
It’s notable that this is Beazley’s first ever full 144a cat bond, as previously it had never sponsored a catastrophe risk exposed 144a ILS deal.
We’re told that the notes issued by PoleStar Re will provide Beazley with broad reinsurance coverage against major cyber loss events that impact its underwriting entities, including the syndicates at Lloyd’s and its US insurers.
This cyber reinsurance coverage will be on an indemnity trigger and per-occurrence basis, across a two year term through calendar year’s 2024 and 2025.
The $75 million of PoleStar Re Series 2024-1 Class A notes would attach their coverage at $500 million of losses to Beazley from a cyber event, we understand.
Sources said that gives the notes an initial attachment probability of 1.71% and an initial expected loss of 1.26%.
We’re told that these cyber cat bond notes are being marketed to cat bond funds and investors with spread price guidance in a range from 12% to 13%.
It’s good to see this second full cyber catastrophe bond deal now in the market and aiming to complete before year-end.
With the AXIS Capital deal progressing and expected to be priced in the next day or so, this sends a strong signal that insurance-linked securities (ILS) investors are welcoming this new peril and ready to assess it, investing in it where appropriate for their portfolios.
It’s also encouraging to note that this second full cyber catastrophe bond deal sees RMS as the risk modeller, so that is now two separate modelling firms working on 144a cyber cat bond deals (CyberCube are modelling the AXIS deal), which is good for the market.
In addition, Gallagher Securities is structuring and offering this deal, so that’s a second broker involved as well (Aon is working on the AXIS deal), again very positive for the cyber cat bond market’s growth potential
You can read all about this PoleStar Re Ltd. (Series 2024-1) catastrophe bond transaction to our Deal Directory, where you can analyse details of almost every cat bond ever issued.
