cyber insurance-linked securities

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).

The cyber risk market is projected to triple in size over the next three to four years, and for that growth to be achieved, solutions like the first cyber insurance-linked securities (ILS) transaction will be vital, according to Paul Bantick, Global Head of Cyber Risks at Beazley.

Cyber risk analytics and quantification software specialist CyberCube has now confirmed that its Portfolio Manager risk model was used for the landmark first catastrophe bond deal sponsored by re/insurer Beazley.

Educating insurance-linked securities (ILS) investors was one of the keys to bringing Beazley’s cyber catastrophe bond successfully to market, according to Ian Newman and Theo Norris of Gallagher Re.

The landmark first cyber catastrophe bond sponsored by London headquartered global underwriter Beazley was issued using an Artex Risk Solutions cat bond and collateralized reinsurance note issuance vehicle, while the risk analysis was undertaken using a risk model from specialist firm CyberCube, Artemis has learned.

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.

London headquartered specialty insurance and reinsurance firm Beazley has successfully secured $45 million of cyber risk reinsurance from capital market investors including insurance-linked securities (ILS) specialist Fermat Capital Management, in what is being termed the first cyber catastrophe bond, the Financial Times has reported this morning.

There are expected to be an increasing number of partnerships on cyber risk underwriting with insurance-linked securities (ILS) fund managers in 2023, according to cyber modelling specialist CyberCube.

Global reinsurance giant Swiss Re has said this morning that the industry needs to adopt a different approach to cyber risk underwriting, while also repeating its call for the development of a cyber insurance-linked securities (ILS) marketplace.

The fourth session at our Artemis London 2022 conference on September 6th featured a keynote speech and a panel discussion, both focused on the potential for cyber risk catastrophe bonds and what the market needs to do for the first cyber cat bond to be issued.