AXIS Capital, the Bermuda headquartered specialty re/insurer, has now successfully priced the very first 144a cyber catastrophe bond and the $75 million Long Walk Reinsurance Ltd. (Series 2024-1) transaction will complete with pricing below the initial target guidance, an important signal of ILS market appetite for cyber risks.
The successful pricing of this first full rule 144a cyber catastrophe bond demonstrates the ability of the insurance-linked securities (ILS) market, its cat bond fund managers and their investors to get comfortable with cyber risks and cyber reinsurance exposure, boding well for future issuances and a new source of risk capital opening up for cyber re/insurers.
AXIS entered the cat bond market with the first 144a cyber cat bond deal back around the middle of October, as we reported on the 18th of the month.
Using Bermuda based special purpose vehicle Long Walk Reinsurance Ltd., AXIS was aiming to secure an issuance of at least $75 million of notes, to provide cyber reinsurance coverage across its main underwriting subsidiaries.
The Long Walk Re cyber cat bond will protect AXIS and subsidiaries against what are being termed systemic cyber events, on an indemnity trigger and per-occurrence basis, over a two year term, beginning from the start of 2024.
We’re now told that this first full cyber cat bond deal has been priced, with issuance remaining at its initial $75 million in size.
The now confirmed as $75 million of Series 2024-1 Class A notes that Long Walk Reinsurance Ltd. come with an initial expected loss of 1.97% and were first offered to investors with spread price guidance of 10%.
That spread guidance was reduced, to a range of between 9.5% and 10%, as we reported yesterday.
But we’ve now learned that final pricing has been achieved and the notes will pay investors a spread of 9.75%, so below the initial guidance level and at the middle of the reduced guidance range, which is a strong result for AXIS.
This clearly signals cat bond market acceptance of cyber risks and a chance for others to participate, as a new peril enters the cat bond market.
It’s very encouraging to see the cat bond market accepting and supporting this first 144a cyber cat bond and it suggests further deals should also be well-received, which bodes well for Beazley who entered the market with its first yesterday.