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Beazley “proud” cat bond investors backed its “high quality” cyber underwriting: CEO


Beazley is “proud” that insurance-linked securities (ILS) investors backed the “high quality” of its cyber underwriting portfolio and supported its sponsorship of a ground-breaking first cyber catastrophe bond, CEO Adrian Cox has said.

adrian-cox-ceo-beazleyThe news broke this morning that Beazley has sponsored what is being termed the first ever cyber catastrophe bond.

It’s notable as this is the first time Beazley has been listed in our catastrophe bond Deal Directory, as the company has never sponsored a cat bond deal before.

Now, the company has shared a little more detail with the media, confirming that it is private Section 4(2) cat bond, but that it is fully tradeable under Rule 144A.

As a result, Beazley hails the deal as being, “the first time that a liquid Insurance-Linked Securities (ILS) instrument has been created for cyber catastrophe risks.”

The $45 million private Section 4(2) catastrophe provides Beazley with indemnity reinsurance protection against all perils in excess of a $300 million cyber catastrophe event.

The company said that the structure gives the potential for additional tranches to be released through 2023 and beyond.

The cyber cat bond has been backed by a panel of ILS investors including Fermat Capital Management, LLC, Beazley explained, while it was structured and placed by Gallagher Securities, the ILS arm of Gallagher Re.

Beazley said that the cyber cat bond will provide it with reinsurance cover for remote probability catastrophic and systemic events.

The company said that, “Developing effective solutions for catastrophe risk is vital to allow the supply of capacity to the cyber (re)insurance market to increase, to meet growing demand for cover from business and society.”

Beazley said it believes that, in cyber risk, “Its robust approach to risk management and pre-underwriting techniques has won investor confidence.”

Adrian Cox, CEO Beazley, explained “I’m proud that the high-quality of Beazley’s cyber underwriting has been recognised by investors in the placement of the market’s first cyber catastrophe bond.

“As a leader in this market, we are at the forefront of delivering new solutions that are allowing the cyber insurance market to grow to the size that clients need. A key element of this facility is its flexibility to scale over time and support our continued, sustainable growth in cyber.

“I’d like to thank the investors and our brokers for their support in achieving this important milestone for the cyber market.”

John Seo, Co-Founder and Managing Director at Fermat Capital Management, LLC and a speaker at our upcoming ILS NYC 2023 conference, also said, “As an ILS investor, we have been monitoring the cyber insurance market for several years waiting for the appropriate opportunity to invest. This well-structured bond together with Beazley’s strong cyber underwriting have provided the basis for us to do so.”

“We believe this deal marks an important step in unlocking capital market investment into cyber risk and creates a solid foundation for a future cyber ILS market,” Seo also commented.

Tom Wakefield, UK CEO, Gallagher Re, added, “Helping to bring new and alternative capacity into the global cyber (re)insurance market to keep pace with rapidly rising demand for risk transfer has been a primary focus of the Gallagher Re cyber team. Beazley’s cyber expertise and proactive engagement with capital markets has proven them to be an instrumental partner in placing this first cyber catastrophe bond on their behalf.

“The calibre of ILS investors involved, and complexity of the class, demanded an underwriting business of high quality to ensure a successful outcome. Where carriers can demonstrate a similar approach, the opportunity exists for a strong and sustainable cyber catastrophe ILS market.”

Given the limited information available, for now we’ve added this transaction to our extensive cat bond Deal Directory under the name Beazley cyber cat bond 2023-1.

The data we have on this cyber cat bond will be added to our catastrophe bond market charts and data visualisations.

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