Beazley sponsors third cyber catastrophe bond, $16.5m Cairney III

Beazley, the London headquartered specialty insurance and reinsurance underwriter, has now added a third privately placed cyber catastrophe bond, taking its cyber cat bond coverage to $81.5 million after securing a further $16.5 million in cyber reinsurance from the capital markets through a Cairney III issuance.

Just earlier this month Adrian Cox, the CEO of Beazley, said he anticipates the company tapping the capital markets for more cyber reinsurance capacity in 2024 through additional cyber catastrophe bonds.

Now, Artemis has learned that plans were already in place to top-up the 2023 cyber cat bond issuances a little more, with this third $16.5 million Cairney III transaction.

Beazley became the first company to sponsor a cyber cat bond back in January 2023, when a $45 million private Section 4(2) cyber catastrophe bond was placed with investors.

That first Beazley cyber cat bond sourced the re/insurer with broad cyber reinsurance cover for remote probability catastrophic and systemic events, including tech errors & omissions (E&O) risks, across a roughly one-year term.

Beazley then followed that up with a second cyber cat bond issuance, using the same private cat bond format.

That second Cairney II cyber cat bond issuance came to market in May and saw Beazley using a second segregated cell to add $20 million of fresh cyber reinsurance cover from the capital markets.

The Beazley cyber cat bonds are privately placed Section 4(2) issuances, using as their special purpose insurer (SPI) the Artex Risk Solutions owned and operated segregated account reinsurance transformer platform, named Artex SAC Limited, acting on behalf of a segregated account, or cell.

Now, a third has come to light, with Beazley sponsoring another $16.5 million Section 4(2) cyber cat bond issuance, using a segregated account named Cairney III, of the same Artex SAC vehicle.

We’re told the reinsurance coverage is for the same type of cyber risks as the other Cairney deals and that the notes will run to the same maturity date.

So once again, this appears an extension of the cyber catastrophe bond coverage from the first two Cairney deals, as the maturity date is the same, being January 8th 2024.

It means that Beazley now has $81.5 million of cyber reinsurance in cyber cat bond form, running to the end of 2023, with final maturity on Jan 8th 2024.

Like the first two Beazley cyber cat bonds, we presume that Gallagher Securities acted as the sole structuring agent & bookrunner, while CyberCube provided the risk modelling.

These Beazley sponsored Cairney cyber cat bonds represent transformed collateralised reinsurance deals, that have been syndicated across a group of investors and securitized using a segregated cell of a special purpose insurance vehicle.

As we’ve explained before, we understand that similar cyber reinsurance arrangements were transacted in traditional form first, then in a collateralised reinsurance forms, before Cairney cyber cat bond deals were sponsored.

You can read all about this Beazley cyber cat bond (Cairney III) in our extensive catastrophe bond Deal Directory.