’We must keep evolving as a market,’ says global head

Specialist insurer Beazley has closed its first 144A cyber catastrophe bond that will provide $140m (£110.9m) in coverage, a statement released yesterday (2 January 2024) revealed.

Issued under the name PoleStar Re Ltd, the bond uses Series 2024-1 Class A notes to cover remote probability catastrophic and systemic events.

It operates on an indemnity trigger and a per-occurrence basis and is set to last for a two-year term, concluding at the end of 2025.

Beazley explained that developing a “dynamic cyber market and effective solutions for catastrophe risk is vital to increasing the supply of capacity to the cyber (re)insurance market to meet growing demand for cover from business and society”.

Paul Bantick, global head of cyber risks at Beazley, added that catastrophe bonds and the insurance-linked securities (ILS), which are financial tools used for risk transfer to capital markets, were “vital” in providing cover for catastrophic events as demand and risk grow.

“To get there, we must keep evolving as a market,” he added.

Cyber bond

Such bonds are similar to regular bonds – for example, investors receive interest payments, often at a flexible rate, and when the bond reaches maturity, investors get back the initial amount they put in.

Beazley launched its first cyber catastrophe bond last year (9 January 2023), which delivered $81m (£68.9m) worth of protection.

This was structured and placed by broker Gallagher Re and bought by investors, including Connecticut-based specialist Fermat Capital Management.

Bantick added: “Investor interest in our issuance has been strong and their support is testament to the confidence they have in our ability to effectively manage cyber risk.

“Building on the success of the market’s first cyber catastrophe bond programme in 2023, we expect to continue scaling our presence in the cyber insurance linked securities market, encouraging others to do the same.”

  • Insurance Times has converted dollar amounts into pounds using an exchange rate of $1.27 = £1, which was correct as of 1 January 2024.