“Pleasing” to see cyber catastrophe bond market develop: Paul Bantick, Beazley

After Beazley pioneered the first privately placed cyber catastrophe bonds, it has been “pleasing” to witness recent cyber cat bond market developments, as the first 144A transactions came to market, Paul Bantick, Global Head of Cyber Risks at Beazley has said.

Beazley sponsored three private cyber cat bonds in 2023, securing $81.5 million in cyber reinsurance across the three Cairney deals that all mature at the end of this year.

Then, the first Rule 144A cyber catastrophe bond emerged from AXIS Capital in October (Long Walk Re), since which Beazley has itself brought a 144A cyber cat bond to market (PoleStar Re) and we now have two others from Chubb (East Lane Re VII) and Swiss Re (Matterhorn Re CYB-A) being offered to investors.

Read about every cyber cat bond transaction issued in the Artemis Deal Directory.

Beazley’s Paul Bantick believes that the cyber insurance market is set for growth, meaning capacity will be a necessity to support underwriters.

“Based on the growth we see, we anticipate that the cyber market will triple in size over the next three to four years,” he explained. “To meet this demand we need a dynamic cyber market, which includes effective solutions for catastrophe risk to enable the supply of quality capacity to the cyber (re)insurance market to increase, and meet the growing demand for cover.”

Bantick continued to explain that, “The last 12 months have seen the creation of the market for cyber insurance-linked securities, following the first-ever cyber catastrophe bond that we launched back in January 2023.

“We hoped that this would lead to growing interest in these transactions, bringing in the additional capacity needed to meet the growing demand for cyber insurance from businesses and society.”

Those private cyber cat bonds have certainly helped in educating the ILS market and insurance-linked securities (ILS) investors, which has likely served to increase the appetite for cyber risk and help in those that followed gaining acceptance for the first 144A cyber cat bond deals.

Bantick said that, “It has been pleasing to see other cyber catastrophe bonds get off the ground this year.”

Going on to forecast that, “As we look to 2024, we predict that we will see an increase in the number of cyber bonds launched as the market evolves, grows, and moves more mainstream.”