Long Walk “a template for future cyber cat bonds” – AXIS CFO Vogt

With AXIS Capital’s landmark $75 million Long Walk Reinsurance Ltd. (Series 2023-1) 144A cyber catastrophe bond issuance having closed this week, CFO Peter Vogt told Artemis that this opens up a new strategic capital source, that can support AXIS’ continued growth in cyber underwriting.

In addition, AXIS Capital CFO Peter Vogt believes the template created with the first successful Rule 144A cyber catastrophe bond can be utilised by others in the market, to expand the necessary capacity sources that cyber risk underwriters need.

“With the tremendous success of Long Walk, we believe that we put together a transaction that the market can use as a template for future cyber cat bonds,” Vogt explained in an interview.

Adding, “As of now, given the growth of the cyber space, there is a strong demand for more capital to support and sustain this market, which is why we created Long Walk.”

Vogt continued to explain that, at AXIS Capital, “We view Long Walk, and the cyber catastrophe bond market, as a meaningful way to support and sustain growth of the cyber market. And the market is growing. By one estimate, cyber premiums are expected to increase by 25-30% percent per year; by another estimate the market could be as large as $50B in GWP by 2030.

“Long Walk is a strategic initiative to proactively provide us with protection should a systemic cyber event occur by bringing new capital to meet the evolving needs of the cyber market.”

In discussion, Vogt went on to say that, there is still some uncertainty as to whether traditional reinsurance markets will have sufficient capacity to support cyber insurance markets on their own in future.

Because of this, “We need to bring more capital in to share this particular systemic cyber risk,” Vogt said.

It’s also about ensuring AXIS is well-protected as it grows its underwriting of inwards cyber risk.

Vogt explained, “Long Walk provides AXIS with reinsurance protection and access to a second capital base. It is a strategic, proactive measure that means we have access to multiple markets so should a catastrophe occur, we can continue operations and continue to serve our clients.”

Vogt was pleased with the support investors showed for the first 144A cyber catastrophe bond issuance, which he described as seeing “tremendous interest in” the Long Walk Re cyber cat bond offering, while investors showed their confidence in the risk and in AXIS through their acceptance of the notes.

“Long Walk was met with broad market acceptance and was well oversubscribed. This allowed us to push pricing below guidance,” Vogt said.

Adding that, “It is also a reflection of the trust and confidence the investor community has on AXIS and our partners.”

In particular, Vogt highlighted the support of broker-dealer Aon Securities, risk modeller CyberCube and law firm Sidley Austin, in getting the first cyber cat bond successfully placed.

Looking ahead, with the template now created, Vogt suggested AXIS could look to the cat bond market for additional support in future, as required.

“The market is dynamic, and we will adjust as needed in the future. We will give serious consideration to further utilizing the Long Walk platform for subsequent transactions,” Vogt told Artemis.

Further explaining that, “For now, Long Walk is a strong example of how AXIS is demonstrating leadership through innovation and by developing elevated specialty solutions to address the challenges in a dynamic marketplace.”

You can read all about this first 144a cyber catastrophe bond Long Walk Reinsurance Ltd. (Series 2023-1)and details of every other cat bond in our extensive Artemis Deal Directory.

Read all of our interviews with ILS market and reinsurance sector professionals here.