Cyber cat bond investment to accelerate in 2024: Norris, Gallagher Re

With $415 million in 144A cyber catastrophe bonds issued in the latter stages of 2023, broker Gallagher Re is expecting activity levels to continue, according to Gallagher Securities’ Head of Cyber ILS, Theo Norris.

Gallagher secured $140 million of cyber reinsurance limit for specialty re/insurer Beazley via the PoleStar Re Ltd. (Series 2024-1) cyber cat bond in December.

The issuance was structured and placed by Gallagher Securities, supported by the reinsurance broking arm Gallagher Re’s Cyber team.

The broking group notes that the PoleStar Re cyber cat bond experienced the biggest upsize of any cyber cat bond issue so far, having started its marketing at $75 million in size, but settled to provide Beazley $140 million in reinsurance.

Theo Norris, Head of Cyber ILS at Gallagher Securities said, “We have long held the belief that cyber risks are investable with the right structure and investor knowledge. Presenting cyber expertise directly to investors was fundamental to our success with PoleStar Re, combined with the right structuring and strategy.”

Gallagher Re’s CEO, Tom Wakefield, added, “Our continued support of Beazley’s cyber capital expansion through PoleStar Re will further accelerate capital market investment in cyber more broadly. We have now taken the next step into 144A bonds – but the journey does not end here.

“We remain dedicated to developing further Cyber ILS products for the capital benefit of our clients.”

Gallagher Re claims to have placed the first collateralised reinsurance cyber trade way back in 2017.

On the cyber cat bond side, the broker was also responsible for the three private Cairney cyber cat bonds that were issued for Beazley earlier in 2023.

In addition, Gallagher more recently structured and launched what is being termed the first retrocession cyber industry loss warranty (ILW) for Swiss Re with a $50 million limit.

Now, the broking group expects investment into cyber cat bonds to continue in 2024, with Norris saying more cyber cat bond activity can be expected this year.

Read all about the cyber catastrophe bonds that hit the market over the last year or so, three private deals and the four more recent full Rule 144A cyber cat bonds.