Beazley targets $150m Fuchsia 2 nat cat bond via Lloyd’s London Bridge 2 PCC

Beazley, the London headquartered specialty insurance and reinsurance underwriter, is back in the cat bond market with a $150 million target for what will be its second natural catastrophe bond, again using the Lloyd’s owned ILS structure to issue this London Bridge 2 PCC Limited (Fuchsia 2 – 2024-1) deal.

From a standing start, Beazley has become a familiar face in the cat bond market over the last two years, having now sponsored three private cyber cat bonds, three Rule 144A cyber catastrophe bonds, and one 144A natural catastrophe bond since the start of 2023.

So, it’s encouraging to see the company returning for more capital markets backed natural catastrophe reinsurance through its second 144A nat cat bond.

We now have 8 entries in our extensive Deal Directory for catastrophe bonds sponsored by Beazley.

For its second cat bond covering natural perils, Beazley is again utilising the Lloyd’s insurance-linked securities (ILS) structure London Bridge 2 PCC Limited, to issue the notes and access capital markets investors.

As a result, this Fuchsia 2 cat bond becomes the second ever issued by London Bridge 2 PCC.

Roughly 1-year ago, Beazley secured $100 million in natural catastrophe reinsurance from its first ever Rule 144A property catastrophe bond, the Fuchsia 2023-1 issuance.

Now, Beazley is targeting similar coverage from its second nat cat bond through London Bridge 2 PCC, but is starting with a larger target, for $150 million of reinsurance protection, sources have told Artemis.

We are told that London Bridge 2 PCC Limited is set to offer and issue a single, currently targeted at $150 million, tranche of Series 2024-1 notes via a protected cell named Fuchsia 2.

The Fuchsia 2 Series 2024-1 notes are set to be offered to cat bond investors and the proceeds from their sale will be used to collateralize a reinsurance agreement between the protected cell of London Bridge 2 PCC and Beazley, providing the company with a source of multi-year international property catastrophe reinsurance protection.

Like the first nat cat bond from Beazley, we understand this new issuance will again protect it against losses from named storm and earthquake events that impact the United States, Canada and certain parts of the Caribbean.

Also like the first cat bond, this new Fuchsia 2 will provide reinsurance to Beazley’s core underwriting entities, including its syndicates at Lloyd’s, its US E&S insurer and Irish insurer.

The targeted $150 million or more in coverage from the Fuchsia 2 2024-1 cat bond notes will provide Beazley with reinsurance across a more than three year term, running from January 2025 to the end of March 2028, we’re told.

The reinsurance coverage from these notes, which will be indemnity trigger and per-occurrence in nature, would attach at $800 million of losses to Beazley and cover a share up to exhaustion at $1 billion, we understand.

Which makes them more remote in risk terms than the previous Fuchsia 2023-1 cat bond issuance for Beazley, which initially covered losses from an attachment of $500 million.

We are told that the $150 million of Fuchsia 2 2024-1 cat bond notes that London Bridge 2 PCC will issue have an initial attachment probability of 1.37%, an initial expected loss of 0.99% and the notes are being offered to investors with spread price guidance in a range from 5% to 5.75%.

It’s encouraging to see Beazley returning and looking to expand on its natural catastrophe bond supported reinsurance protection from the capital markets.

The company has been growing its portfolio steadily in recent years, so clearly has developed a liking for the diversifying risk capital source the insurance-linked securities (ILS) market can provide.

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.