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Beazley’s cyber cat bond “Cairney” listed on the BSX


The just over $45 million of private cyber catastrophe bond notes issued, by the Artex SAC vehicle using its segregated account named Cairney on behalf of sponsor Beazley, have now been listed on the Bermuda Stock Exchange (BSX).

beazley-bermudaEarlier this week Beazley announced the successful placement of a $45 million private Section 4(2) cyber catastrophe bond, which it hails as the first such deal.

This Cairney cyber cat bond transaction provides Beazley with one year of per-occurrence indemnity reinsurance protection against all perils in excess of a $300 million cyber catastrophe event.

The cyber insurance-linked securities (ILS) arrangement provides Beazley with cyber reinsurance cover for remote probability catastrophic and systemic events and this is a broad cyber catastrophe cover that also includes tech errors & omissions (E&O) risks.

Being a privately placed Section 4(2) cat bond, this Cairney deal as it is called, is akin to a transformed collateralised reinsurance deal that has been syndicated across a group of investors and securitized using a segregated cell of a special purpose insurance vehicle.

In fact, Beazley and brokers Gallagher Re had already proven the coverage concept in traditional and collateralized reinsurance forms, we understand, before securitizing it through the Artex vehicle as this Cairney cyber cat bond.

The special purpose insurer (SPI) used for this transaction was the Artex Risk Solutions owned and operated segregated account reinsurance transformer platform named Artex SAC Limited.

The almost $45.06 million of notes were issued using Artex SAC Limited’s ILS Note Program II, on behalf of a segregated account named Cairney.

Now, those notes have been listed on the Bermuda Stock Exchange and are due for maturity January 8th 2024.

For some investors, a listing can make cat bonds and ILS an even more appealing asset class to invest in, due to portfolio requirements for securities to be listed and tradable.

The listing on a recognised exchange, such as the BSX, is considered an enhancement to secondary liquidity, as well as providing an added level of rigour and transparency for ILS transactions, to the benefit of the asset class as a whole.

The next step for Beazley, as the company wants to expand on this first cyber cat bond arrangement, would be to take this initial Cairney cat bond to a full 144A cyber cat bond issuance.

It will be interesting to see how long that takes, or whether there are further Section 4(2) tranches issued first.

As, now the concept has been proven it would be very cost-effective to repeat this private Cairney cyber ILS deal. Where as a full 144A cyber cat bond issuance will come with additional effort and expense for the sponsor.

You can read all about Beazley’s first cyber cat bond in our extensive cat bond Deal Directory.

Also read:

Beazley secures $45m cyber cat bond with Fermat Capital a backer.

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

Beazley’s cyber cat bond used Artex SAC vehicle & CyberCube model.

Cyber ILS critical to help market evolve and grow: Paul Bantick, Beazley.

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