Beazley secures its largest nat cat bond yet, as $200m Fuchsia 2 priced at low-end

Beazley has secured what will become its largest natural catastrophe bond yet, as the company successfully priced the notes from its new London Bridge 2 PCC Limited (Fuchsia 2 – 2024-1) deal to provide it with the one-third upsized target of $200 million of reinsurance protection, Artemis has learned.

London headquartered specialty insurance and reinsurance underwriter Beazley returned to the catastrophe bond market at the start of December, with its second property catastrophe bond sponsorship.

Initially, Beazley was seeking $150 million of reinsurance protection from its second natural catastrophe bond, with the notes to be issued through the Lloyd’s insurance-linked securities (ILS) vehicle London Bridge 2 PCC.

It’s Beazley’s second issuance to use the London Bridge 2 PCC structure, as the company looked to utilise the UK based special purpose reinsurance vehicle as a conduit to the capital markets for reinsurance protection.

There are 8 entries in our extensive Deal Directory for catastrophe bonds sponsored by Beazley, including its first Fuchsia nat cat deal from late 2023.

As we later reported, the size target for the Fuchsia 2 cat bond was increased to provide Beazley with one-third more, or $200 million, in multi-year and fully-collateralized reinsurance protection, while at the same time the price guidance for the single tranche of notes on offer was narrowed and lowered.

Now, sources have told us that Beazley’s latest cat bond has been successfully priced, with the 33.3% upsized $200 million of reinsurance now secured for the company, while the pricing settled at the low-end of initial guidance.

As a result, this will become Beazley’s largest property cat bond, once settled, while it falls just behind one of the PoleStar cyber cat bonds that was $210 million in size.

Now priced, it is confirmed that the Fuchsia 2 Series 2024-1 notes issuance from London Bridge 2 PCC will provide Beazley with $200 million of indemnity trigger and per-occurrence reinsurance against named storm and earthquake losses within the United States, Canada and certain parts of the Caribbean, running from January 2025 to the end of March 2028.

The $200 million of Fuchsia 2 Series 2024-1 cat bond notes, which will come with an initial expected loss of 0.99%, were initially offered to cat bond investors with spread price guidance in a range from 5% to 5.75%. As we later reported, that price guidance was lowered and narrowed to an updated range of 5% to 5.25%.

We’re now told that the notes have priced to pay investors a risk interest spread at the bottom of guidance, at 5%.

Once this second property cat bond has settled for Beazley, the company will lift its outstanding in-force catastrophe bond protection to $810 million, of which $300 million of risk capital provides natural catastrophe reinsurance to the company, the remaining $510 million being cat bond cover for cyber reinsurance losses.

You can read all about this London Bridge 2 PCC Limited (Fuchsia 2 – 2024-1) catastrophe bond transaction in our Deal Directory, where you can analyse details of almost every cat bond ever issued.