Aon placed cyber ILS for one of the largest European corporates: Andersen

Broker Aon has successfully taken the structure it created for the first 144A cyber catastrophe bond and repurposed it to place a cyber insurance-linked securities (ILS) solution for one of the largest corporations in Europe, President Eric Andersen divulged today.

Speaking during the Aon fourth-quarter and full-year 2023 earnings call today, CEO Greg Case was discussing the synergies within the Aon business, that see the broker able to take its technical expertise, human capital and structuring skills and create new opportunities across different segments of the enterprise.

CEO Greg Case was speaking about the “connection of commercial risk and reinsurance and risk capital”, in relation to this and how Aon can utilise expertise from insurance, to deliver reinsurance solutions and vice versa.

Case handed over to Eric Andersen to explain “the risk capital implications of how all this is coming together and the potential around it.”

Aon President Andersen explained, “I’ll use it as an opportunity to show the connectivity between the risk capital framework and maybe I’ll talk about the cat bond that I know we wanted to get some airtime on.

“We did the first ever cyber cat bond in the quarter, which was a great opportunity for our team working with one of our insurance company clients to take the systemic cyber risk and get it into the capital markets, which does two things.

“It actually allows the insurer to open up the amount of limit they provide to clients, which was something that our clients were looking for.

“And it also appropriately values and places that type of systemic risk into the right capital source.”

Andersen went on to divulge, “The point of it is, we were then able to take that ILS structure, using the data and analytics that we did to build it, and used it to do an ILS structure for one of the largest corporates in Europe, who was looking for a traditional cyber programme, but wasn’t able to get the limit they wanted.

“So, taking something that we did for an insurer, using the data and analytics and structuring, bringing it to a large corporate.”

Andersen then explained that the cyber catastrophe bond structuring experience also fed back down to inform Aon’s risk analytics offering.

He said the broker was able to “Take the same data and analytics that we used to build the cat bond and then the corporate structure, to actually power the CyQu (Cyber Quotient Evaluation) product, that is built for the middle-market, which then attaches a risk transfer product to it.

“So again, using data and analytics on one topic, just cyber, actually to drive growth in reinsurance, in commercial risk and ultimately in the middle-market part of the commercial risk segment.

“That’s what’s driving the retention, that’s what’s driving the strong new business and I think those opportunities exist for us across multiple areas.”

Aon’s investment banking arm Aon Securities acted as the sole structuring agent and bookrunner for AXIS Capital’s Long Walk Reinsurance Ltd. (Series 2024-1) cyber catastrophe bond, which was the first 144A deal to settle in the latter part of 2023.