Beazley prices first London Bridge cat bond, $100m Fuchsia 2023-1, at top-end

Beazley, the London headquartered specialty insurance and reinsurance underwriter, has now successfully secured the targeted $100 million in natural catastrophe reinsurance from its first ever Rule 144A property catastrophe bond, while the Fuchsia 2023-1 notes were eventually priced at the top-end of initial guidance.

Not only is this Beazley’s first ever sponsorship of a natural catastrophe bond, this is also the first cat bond to be issued using the Lloyd’s sponsored UK domiciled insurance-linked securities (ILS) vehicle, London Bridge 2 PCC Limited.

Beazley entered the market with its first ever Rule 144A property catastrophe bond back in November, seeking $100 million or more in protection through a Fuchsia 2023-1 issuance using the Lloyd’s owned ILS structure London Bridge 2 PCC Limited.

The deal came to market with its sponsor Beazley also in the market for its first cyber cat bond, the PoleStar Re 2024-1 deal that also priced this week, at the same time.

With this Fuchsia 2023-1 property cat bond though, Beazley’s target for the amount of coverage did not change, as we reported yesterday, but the pricing for the notes did.

Now, we’re told that the London Bridge 2 PCC Limited Fuchsia 2023-1 notes have been priced and Beazley has as a result locked-in the $100 million of coverage from its debut property cat bond.

These Fuchsia 2023-1 notes are now confirmed to provide Beazley entities with a $100 million source of multi-year international property catastrophe reinsurance protection, covering named storm and earthquake events affecting the United States, Canada and certain parts of the Caribbean on an indemnity and per-occurrence over a three-year term.

The $100 million of London Bridge 2 PCC Fuchsia 2023-1 cat bond notes have an initial expected loss of 2.46% and were first marketed to investors with spread guidance in a range from 9% to 10%.

The notes were priced at the upper-end of that range, to pay cat bond investors a spread of 10%, we’re now told.

Which means Beazley has successfully sourced $240 million of reinsurance protection from the capital markets using the catastrophe bond structure this week, with the pricing of its $140 million PoleStar Re cyber cat bond and now this $100 million Fuchsia property cat bond.

Beazley has now shown the way for other Lloyd’s entities to use the London Bridge 2 PCC structure as an efficient way to secure collateralized catastrophe reinsurance protection, on an excess-of-loss basis.

As the first excess-of-loss ILS deal and first 144A cat bond to be issued by the Lloyd’s sponsored vehicle, this example could drive further interest in utilising London Bridge 2 PCC.

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.