First London Bridge cat bond a valuable roadmap for Lloyd’s market: CFO Keese

The first catastrophe bond to be issued using the London Bridge 2 PCC insurance-linked securities (ILS) structure provides a valuable roadmap for Lloyd’s market participants and Lloyd’s CFO believes the market’s ILS platform offers a viable alternative to domiciles like Bermuda.

Speaking last week during the latest Lloyd’s market message, CFO Burkhard Keese explained that the insurance and reinsurance industry needs to focus on investor needs, delivering transparency and supporting efficient ways for them to access risk.

Keese also discussed the first 144A catastrophe bond issuance to use Lloyd’s ILS offering, the London Bridge 2 PCC protected cell and special purpose reinsurance structure.

Recall that, Beazley sponsored its first natural catastrophe bond towards the end of 2023, the $100 million Fuchsia 2023-1 transaction.

That Fuchsia 2023-1 cat bond was issued through the Lloyd’s sponsored risk transformation platform London Bridge 2 PCC Limited.

Speaking last week, Keese commented, “London bridge had a good year in difficult conditions. It now has raised $750 million in capital, in supporting thirteen cells, and thanks to Beazley London Bridge 2 launched the first 144A cat bond.”

Keese went on to explain, “The successful transaction provides a valuable roadmap for other market participants to follow, as we seek to provide a more meaningful and diversified source of capital for syndicates in support of the profitable growth ambitions of the market.”

Importantly for Beazley, it was able to use the Lloyd’s sponsored ILS structure to issue a cat bond that protected more than just the risk sitting in its Lloyd’s syndicate balance-sheets.

The Fuchsia 2023-1 cat bond also covered Beazley’s property exposures in its US excess and surplus lines carrier and Ireland domiciled Beazley Insurance DAC.

Keese noted that this is important for the larger players at Lloyd’s, to know they can use London Bridge 2 PCC to secure reinsurance across their global businesses, not just their business at Lloyd’s.

“This cat bond provides cover in and outside of Lloyd’s, ideal for multi-platform players,” Keese said.

He went on to note that, he believes, London Bridge 2 PCC offers an efficient alternative catastrophe bond and ILS issuance platform.

“Our regulators were highly supportive and there was no longer timeline needed, compared to Bermuda or other places,” Keese explained.

Adding, “So come and challenge us, you will be surprised.”

You can read all about the 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.