Beazley seeks $75m+ PoleStar Re 2024-3 cyber cat bond to extend reinsurance tower
Beazley is back in the 144A catastrophe bond market and looking to extend its cyber reinsurance tower with the support of the capital markets, seeking a $75 million or larger PoleStar Re Ltd. (Series 2024-3) cyber catastrophe bond issuance, Artemis has learned.
It’s now the third 144A cyber catastrophe bond sponsorship from the London headquartered specialty insurance and reinsurance underwriter in less than one year, as the company continues to put the capital markets at the heart of its expanding reinsurance needs to support its growing cyber book of business.
Beazley first sponsored a 144A cyber cat bond in December 2023, with the $140 million PoleStar Re 2024-1 deal. This was followed by a $160 million PoleStar Re Ltd. (Series 2024-2) issuance in May 2024.
Those first two PoleStar Re cyber cat bonds filled out a layer of Beazley’s cyber reinsurance tower from an attachment point of $500 million up to exhaustion at $800 million.
With this new PoleStar Re 2024-3 cyber cat bond, Beazley is looking to build out coverage on top of that, we have learned from sources.
We are told the structure remains very similar to the first two cyber catastrophe bonds from Beazley.
PoleStar Re Ltd., the Bermuda based special purpose insurer (SPI), will look to issue a single tranche of Class A cat bond notes that will be sold to investors and the proceeds used to collateralize the underlying reinsurance agreement with Beazley.
The coverage will be on an indemnity trigger and per-occurrence basis, like the first two cyber cat bonds and again it is designed to provide Beazley a source of broad cyber reinsurance coverage from the capital markets, protecting it against major cyber loss events that impact its underwriting entities, including the syndicates at Lloyd’s and its US insurers.
This time though, the attachment point for the PoleStar Re 2024-3 cyber cat bond notes is at $800 million, sitting atop of the first two issuances.
But, the latest Beazley cyber cat bond will span a much wider layer, with exhaustion set to be $1.2 billion. That could suggest a maximum size of $400 million were investor appetite to prove strong enough for the cat bond to fill the layer, although it could also be set to share the layer with other reinsurance sources.
We’re told this new PoleStar Re 2024-3 cyber cat bond will provide Beazley with coverage through to the end of 2027, with now all the cyber cat bond renewals for the company aligned and staggered in the months of January over the next few years.
We understand the notes will come with an initial attachment probability of 1.2%, an initial exhaustion probability of 0.7% and an initial expected loss of 0.93%.
The currently $75 million of PoleStar Re 2024-3 cyber cat bond notes on offer come with price guidance in a range from 9.5% to 10.5%, we are told.
Interestingly, at the mid-point of that guidance of 10% it would be a slightly higher multiple-at-market than the 2024-2 and 2024-3 notes paid investors. Which should serve to make these new cyber cat bond notes from Beazley appealing to investors and could help the company in securing strong execution and also upsizing the issuance.
It’s encouraging to see Beazley looking to further expand on its cyber catastrophe bond protection, as it reflects the company’s desire to foster deep relationships with the capital markets and ILS investors, in the knowledge alternative capital sources are going to be key as it expands its cyber underwriting business.
You can read all about this PoleStar Re Ltd. (Series 2024-3) 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.
