Beazley aims to upsize debut cyber cat bond Pole Star Re 73% to $130m

Beazley, the London headquartered specialty insurance and reinsurance underwriter, is aiming to significantly increase the size of its debut 144A cyber catastrophe bond issuance,  with the PoleStar Re Ltd. (Series 2024-1) now targeted to secure the company $130 million of cyber reinsurance, a 73% upsizing from the initial offering size.

Artemis has learned that, having begun marketing the PoleStar Re cyber catastrophe bond at $75 million of notes in size, Beazley has now updated that to become a $130 million offering.

At that size, the first Rule 144A cyber cat bond from Beazley will become the largest cyber cat bond so far, while more than replacing the aggregate $81.5 million of cyber reinsurance protection from its three private cyber cat bonds, the Cairney series of insurance-linked securities (ILS), that all mature at year-end.

At the same time as the offering size for this PoleStar Re cyber cat bond has been increased by 73% to $130 million, the price guidance has also been elevated to the top-end of initial guidance, we are told.

Which is encouraging, as Beazley clearly sees the pricing as conducive to secure more cyber reinsurance from the capital markets, while cat bond investors have responded positively to its need for cyber protection, sending a strong signal to other potential cyber cat bond sponsors.

We had exclusively reported back in October that Beazley was expected to come to market with its first full 144A cyber cat bond before the end of this year.

Artemis was then first to report that Beazley entered the 144A cyber cat bond market with this PoleStar Re 2024-1 issuance around the middle of November.

The PoleStar Re cyber cat bond will provide Beazley broad reinsurance coverage against major cyber loss events that impact its underwriting entities, including the syndicates at Lloyd’s and its US insurers, with the cyber reinsurance coverage structured on an indemnity trigger and per-occurrence basis, across a two year term through calendar year’s 2024 and 2025.

As said, the initial target was for $75 million of cover, with the notes attaching their coverage from $500 million of losses to Beazley after a cyber event, covering a share of losses to $800 million.

Now, the notes will cover a greater share of those losses, it appears, with the PoleStar Re Series 2024-1 Class A notes now marketed as a $130 million offering.

The now $130 million of PoleStar Re cyber cat bond notes on offer come with an initial expected loss of 1.26% and were first marketed to cat bond funds and investors with spread price guidance in a range from 12% to 13%.

We’re now told that spread price guidance has been fixed at 13%, so the top-end of the initial range.

This first PoleStar Re cyber cat bond from Beazley looks set to secure strong execution, with a significant increase in size despite the pricing moving to the top-end.

You can read all about this PoleStar Re Ltd. (Series 2024-1)  catastrophe bond transaction to our Deal Directory, where you can analyse details of almost every cat bond ever issued.