Cyber ILS – Cyber Insurance-Linked Securities news

While it has been growing its cyber underwriting business, specialist insurer Beazley has also implemented a robust hedging strategy to control the tail, recently securing a $290 million cyber industry loss warranty (ILW) cover and securing its third PoleStar Re cyber catastrophe bond.

Although Christian Bruns, Partner and Portfolio Manager at LGT ILS Partners Ltd., noted that transacting cyber risk in an excess-of-loss format may not currently be in the best interest of the firm’s investors, he highlighted the potential to transact the risk in a quota-share format through its in-house rated reinsurance carrier, Lumen Re.

The US cyber insurance industry loss index launched in 2023 by PERILS AG and CyberAcuView has now been expanded to also include reporting on unintentional, or accidental, cyber insurance industry loss events.

Analysis from broking group Aon and Parametrix, a specialist in parametric cloud downtime cyber risk transfer, shows that it is possible to gain diversification within cyber portfolios that have cloud outage risk concentrations, with geography one way to achieve that.

Beazley has now secured its latest cyber catastrophe bond and further upsized the transaction to provide even more in reinsurance, with the PoleStar Re Ltd. (Series 2024-3) issuance set to price at $210 million in size for the company, Artemis has learned.

Beazley is aiming to more than double the size of its latest cyber catastrophe bond, with the PoleStar Re Ltd. (Series 2024-3) issuance now targeted to secure $200 million in reinsurance protection, Artemis has learned.

Beazley is back in the 144A catastrophe bond market and looking to extend its cyber reinsurance tower with the support of the capital markets, seeking a $75 million or larger PoleStar Re Ltd. (Series 2024-3) cyber catastrophe bond issuance, Artemis has learned.

New growth projections for the global cyber insurance market suggest a massive need for reinsurance and risk capital, of which the insurance-linked securities (ILS) market is expected to become a key source, according to CyberCube.

While the retrocession strategies of Europe’s Big Four reinsurance companies may differ, the still relatively new retro option of sponsoring cyber catastrophe bonds may prove to be an area of commonality between them.

Concerns over how a cyber catastrophe loss event could manifest mean many insurance-linked securities (ILS) investors remain cautious when it comes to considering allocating to cyber catastrophe bonds and reinsurance, but interest continues to rise and broker Lockton Re expects more efficient capital will flow to cyber risks in time.