Second PoleStar cyber cat bond testament to replicable structure: Norris, Gallagher Securities
The successful second cyber catastrophe bond sponsored by Beazley, the $160 million PoleStar Re Ltd. (Series 2024-2) issuance that we reported on last Friday, is testament to the replicable 144A structure that has been created, according to Theo Norris, Head of Cyber ILS at Gallagher Securities.
Gallagher Securities, the capital markets and insurance-linked securities (ILS) arm of reinsurance broker Gallagher Re, acted as the sole structuring agent and bookrunner for the second cyber cat bond for Beazley.
As we were first to report last week, the second issuance is a slightly larger takedown of the same structure, which we expect completes the filling out of the same reinsurance layer in Beazley’s cyber tower.
The $160 million PoleStar Re 2024-2 is slightly larger than the first $140 million deal and now positions Beazley with $300 million of cyber cat bond protection, taking the total amount of cyber risk in the 144A catastrophe bond market to $588.75 million, with Beazley now contributing more than half of that sum.
Gallagher Securities noted this morning that the broker-dealer has now been responsible for over 50% of the cyber cat bond limit outstanding, given it led both of the Beazley deals.
Also of note, Beazley now has $400 million of outstanding catastrophe bond limit in-force, including its first natural catastrophe bond the $100 million London Bridge 2 PCC Limited (Fuchsia 2023-1).
“Cyber cat bonds are becoming a regular product offering and complement the property class for investors,” the broker unit explained.
Gallagher Securities has been involved in cyber insurance-linked securities (ILS) since 2017, when it placed its first transaction.
It later helped Beazley to its three privately placed Cairney cyber cat bond deals, which securitized what had previously been a collateralized reinsurance placement.
This latest issuance shows the maturing of the cyber cat bond and ILS market, as investors accept and upsize a second takedown from the PoleStar Re structure for Beazley.
Gallagher Securities’ Head of Cyber ILS, Theo Norris, said, “This is testament to the compelling and replicable structure developed in PoleStar Re.
“There is plenty more to come for the Cyber ILS market, and the trajectory of diversifying capital entering the space is exciting for cedants and investors alike.”
Ian Newman, Head of Cyber at Gallagher Re added, “We have been accessing the capital markets in cyber insurance since 2017, and its remarkable how far we’ve come. Cyber truly is investable with the right structure and knowledge.
“We remain dedicated to developing further Cyber ILS products for the capital benefit of our clients.”
Gallagher Securities said that the ILS investor base has “become more engaged with cyber-related investments in recent months and is rapidly developing its understanding of the risk class – from modelling to cyber security and mitigation.”
The company said that its work in cyber cat bonds and ILS has now “attracted discussions with other capital-constrained cedants looking to solve their capacity needs,” which is positive, as the market needs to keep growing to make cyber a truly compelling diversification opportunity within the ILS market, rather than just a niche.
You can read all about this PoleStar Re Ltd. (Series 2024-2) catastrophe bond transaction to our Deal Directory, where you can analyse details of almost every cat bond ever issued and filter the list by peril to show only cyber cat bonds.
