PoleStar Re Ltd. (Series 2024-3)

This is Beazley’s third 144A cyber catastrophe bond under PoleStar Re Ltd. and the third issuance of 2024 for the company, as the specialty re/insurer looks to build on its cyber cat bond backed reinsurance, with this latest deal set to sit atop of the previous two PoleStar Re cyber cat bonds.

We are told the structure remains very similar to the first two cyber catastrophe bonds from Beazley.

PoleStar Re Ltd., the Bermuda based special purpose insurer (SPI), will look to issue a single tranche of Class A cat bond notes that will be sold to investors and the proceeds used to collateralize the underlying reinsurance agreement with Beazley.

The coverage will be on an indemnity trigger and per-occurrence basis, like the first two cyber cat bonds and again it is designed to provide Beazley a source of broad cyber reinsurance coverage from the capital markets, protecting it against major cyber loss events that impact its underwriting entities, including the syndicates at Lloyd’s and its US insurers.

This time though, the attachment point for the PoleStar Re 2024-3 cyber cat bond notes is at $800 million, sitting atop of the first two issuances.

But, the latest Beazley cyber cat bond will span a much wider layer, with exhaustion set to be $1.2 billion. That could suggest a maximum size of $400 million were investor appetite to prove strong enough for the cat bond to fill the layer, although it could also be set to share the layer with other reinsurance sources.

We’re told this new PoleStar Re 2024-3 cyber cat bond will provide Beazley with coverage through to the end of 2027, with now all the cyber cat bond renewals for the company aligned and staggered in the months of January over the next few years.

We understand the notes will come with an initial attachment probability of 1.2%, an initial exhaustion probability of 0.7% and an initial expected loss of 0.93%.

The currently $75 million of PoleStar Re 2024-3 cyber cat bond notes on offer come with price guidance in a range from 9.5% to 10.5%, we are told.

Interestingly, at the mid-point of that guidance of 10% it would be a slightly higher multiple-at-market than the 2024-2 and 2024-3 notes paid investors.

Update 1:

We are told that the target size of Beazley’s PoleStar Re 2024-3 cyber cat bond has grown to provide the insurer with $200 million of coverage.

Artemis has also learned that price guidance for the PoleStar Re 2024-3 cyber cat bond notes has been updated at the top-end, of 10.5%, from the previous range of 9.5% to 10.5%.

Update 2:

We understand Beazley further upsized its new PoleStar Re Ltd. Series 20204-3 cyber catastrophe bond, to secure and price the deal to provide it $210 million of reinsurance, while pricing was finalised at the 10.5% top-end of initial guidance.