Beazley hails cat bonds, says cyber underwriting proved resilient to CrowdStrike
Specialist re/insurer Beazley said this morning that it aims to develop a “vibrant” cyber reinsurance market with the help of insurance-linked securities (ILS) investors, while also noting that the recent CrowdStrike IT outage has shown its cyber underwriting was resilient to such a loss event.
Beazley is, of course, the sponsor of a number of cyber catastrophe bonds, the most active sponsor in that segment of the ILS market so far.
For the first-half of the year, the company has reported a strong result in its cyber underwriting business, saying the favourable performance of its cyber book resulted in a lower claims ratio than in the same period in 2023.
Adrian Cox, CEO of Beazley said this morning, “When faced with the world’s largest ever IT outage, Beazley’s approach to underwriting cyber risk was tested and proved to be highly resilient.”
Cox further explained, “On 19 July the world experienced its worst ever systems outage. I am proud of the response of all our teams to support clients during this incident, particularly those in Claims, Cyber Risks and at Beazley Security.
“We have long prepared for an incident of this nature and as a result I am pleased to confirm this event had no impact on our view of the outlook for the remainder of 2024.
“Our approach to cyber has been tested and proved resilient and we remain committed to a stable and sustainable rating environment.”
Which will be encouraging for the holders of Beazley’s cyber catastrophe bonds, as this is a further confirmation that there is no chance of the CrowdStrike event affecting them.
Recall that Beazley sponsored a $140 million PoleStar Re Ltd. (Series 2024-1) cyber cat bond issuance last December and a more recently issued $160 million PoleStar Re Ltd. (Series 2024-2) cyber bond, which are both presumed to occupy a layer of Beazley’s cyber reinsurance tower attaching at $500 million in losses.
From the results today and given the profitability of Beazley’s cyber book for H1, it seems the companies losses from the event will be far lower.
Also today, Beazley’s CEO highlighted its activity in the catastrophe bond market as a key achievement this year.
Cox said, “At the start of the year, we announced the launch of our first 144a Cyber Catastrophe bond. At $140m it was nearly twice the size of the cover we achieved in 2023, via the market’s first ever cyber catastrophe bond, and in May 2024, the bond more than doubled to $300m. Both of these have been a great success and we will continue to look at opportunities in a similar vein in the future.
“We were also the first company to launch a property catastrophe bond on the Lloyd’s London Bridge platform at the start of the year. This is also the first time that Beazley has sponsored its own property catastrophe bond.”
It’s clear Beazley sees cultivating ILS investor appetites as critical, particularly in cyber risks.
CEO Cox commented, “These developments are testament to the outstanding work of our team in managing and modelling cyber risk so that we have a specialist investor base eager to invest.
“Together we are creating a vibrant cyber reinsurance market which will benefit the development of the whole cyber insurance industry.”
Read about every cyber cat bond transaction, including the first private cat bond deals and the more recent 144A cyber cat bonds, by filtering our Deal Directory by peril to view only cyber cat bond transactions.
