AXIS Capital, the specialist reinsurer headquartered in Bermuda, has now successfully valued the first ever 144a cyber catastrophe bond and the amount of $75 million Long Walk Reinsurance Ltd. (series 2023-1) the transaction will close with a price lower than the initial target, an important signal of the ILS market’s appetite for cyber risks.
The successful valuation of this first full Rule 144a compliant cyber catastrophe bond demonstrates the ability of the insurance-linked securities (ILS) market, its catastrophe bond fund managers and their investors to become familiar with cyber risks and exposure to cyber reinsurance, which bodes well for future issuance. and a new source of risk capital opening up for cyber-re/insurers.
AXIS entered the catalytic bond market with the first 144a cyber catalytic bond transaction around mid-October, as we reported on the 18th of the month.
Using the Bermuda-based Long Walk Reinsurance Ltd. special purpose vehicle, AXIS aimed to secure an issuance of at least $75 million of notes, to provide cyber reinsurance coverage to all of its major subsidiaries subscription.
The Long Walk Re cybercat bond will protect AXIS and its subsidiaries against so-called systemic cyber events, on a per-occurrence compensation trigger basis, over a period of two years, starting in early 2024.
We are now told that this first full transaction of cybercat bonds has been priced, with the issue remaining at its original size of $75 million.
The now confirmed $75 million Series 2023-1 Class A notes indicate that Long Walk Reinsurance Ltd. has an expected initial loss of 1.97% and was initially offered to investors with a 10% price spread.
This spread guidance has been reduced to a range between 9.5% and 10%, as we reported yesterday.
But we have now learned that the final price has been reached and that the notes will earn investors a spread of 9.75%, so below the initial guidance level and in the middle of the reduced guidance range, which is a good result for AXIS.
This clearly indicates that the catalytic bond market accepts cyber risks and provides opportunities for others to participate, as a new peril emerges in the catalytic bond market.
It is very encouraging to see the catalytic bond market accepting and supporting this first cyber-cat bond 144a and suggests that other transactions should also be well received, which bodes well for Beazley who entered the market with his first yesterday.
You can find out everything about this first 144a cyber disaster obligation Long Walk Reinsurance Ltd. (series 2023-1) and details of all other chat obligations in our extensive Directory of Artemis offers.