London Bridge 2 PCC Limited (Fuchsia 3 – 2025-1)

Beazley, the London headquartered specialty insurance and reinsurance underwriter, is back in the catastrophe bond market for what will be its third 144A natural catastrophe bond.

For its third cat bond covering natural perils, Beazley is using the Lloyd’s insurance-linked securities (ILS) structure London Bridge 2 PCC Limited again, with this vehicle set to issue the notes and access capital markets investors, while channelling the reinsurance to Beazley.

We understand that London Bridge 2 PCC Limited is offering a single, currently targeted at $100 million, tranche of Series 2025-1 notes via a protected cell named Fuchsia 3.

The Fuchsia 3 Series 2025-1 notes are being offered to cat bond investors and the proceeds from their sale will ultimately be used to collateralize a reinsurance agreement between the protected cell of London Bridge 2 PCC and Beazley, providing the company with a source of multi-year international property catastrophe reinsurance protection.

Like its first two nat cat bonds, we understand this new issuance will again protect Beazley against losses from named storm and earthquake events that impact the United States, Canada and certain parts of the Caribbean.

Also similarly to the first two nat cat bonds sponsored by the company, this new Fuchsia 3 cat bond will provide reinsurance to protect Beazley’s core underwriting entities, including its syndicates at Lloyd’s, its US E&S insurer and Irish insurer.

The targeted $100 million or more in coverage from the Fuchsia 3 2025-1 cat bond notes will provide Beazley with reinsurance across a more than three year term, running from January 2026 to the end of March 2029, which is aligned with the previous Fuchsia deal maturity scheduling we understand.

The notes issued will provide Beazley with indemnity trigger and per-occurrence based reinsurance that would attach at $900 million of losses to Beazley and cover a share up to exhaustion at $1.2 billion, we understand.

Which makes them slightly more remote in risk terms than the previous fuchsia cat bonds, as the first initially covered losses from an attachment of $500 million and the second from $800 million.

The currently $100 million of Fuchsia 3 2025-1 cat bond notes that London Bridge 2 PCC is set to issue come with an initial attachment probability of 1.37%, an initial expected loss of 0.93% and the notes are being offered to investors with spread price guidance in a range from 3.75% to 4.5%, sources told us.

Update 1:

Beazley remains on track to secure the targeted $100 million of reinsurance from its third Fuchsia nat cat bond sponsorship.

The $100 million of Fuchsia 3 2025-1 cat bond notes are now offered with price guidance in a range from 3.5% to 3.75%, so sightly reduced from the initial guidance.

Update 2:

Beazley is still targeting $100 million of reinsurance from its third Fuchsia nat cat bond sponsorship, but the price guidance has been lowered again.

The $100 million of Fuchsia 3 2025-1 cat bond notes are now offered with price guidance in a range from 3.25% to 3.5%, so further below the initial range.

Update 3:

Beazley has secured the targeted $100 million of reinsurance from its third Fuchsia nat cat bond sponsorship.

The $100 million of Fuchsia 3 2025-1 cat bond notes have been priced to pay investors an initial risk interest spread of 3.25%, so the low-end of the twice revised range.