Beazley cyber cat bond 2023-1

Beazley, the London headquarters insurance and reinsurance company, has sponsored a $45 million Section 4(2) private catastrophe bond that provides the company with capital market investor-backed cyber reinsurance protection.

It’s also notable as this is the first time Beazley has been listed in our catastrophe bond Deal Directory, as the company has never sponsored a cat bond deal before.

While this first cyber cat bond is a private Section 4(2) cat bond, it is fully tradeable under Rule 144A.

With this being termed a cyber catastrophe bond, we assume that underpinning it is an excess-of-loss reinsurance or retrocession arrangement and it covers what is considered relatively remote cyber risk for Beazley.

The $45 million private Section 4(2) catastrophe provides Beazley with one year of indemnity reinsurance protection against all perils in excess of a $300 million cyber catastrophe event, the attachment point for the cyber cat bond notes.

As a result, it appears to be an indemnity cat bond, that will provide Beazley with reinsurance protection on a per-occurrence basis.

The company said that the structure gives the potential for additional tranches to be released through 2023 and beyond.

The cyber cat bond has been backed by a panel of ILS investors including Fermat Capital Management, LLC, Beazley explained, while it was structured and placed by Gallagher Securities, the ILS arm of Gallagher Re.

Beazley said that the cyber cat bond will provide it with reinsurance cover for remote probability catastrophic and systemic events.

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

The special purpose insurer (SPI) used for this transaction was the Artex Risk Solutions owned and operated Artex SAC Limited.

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