Axis closes landmark $75m cyber catastrophe bond
Long Walk Re issuance provides two years of fully-collateralised indemnity reinsurance protection for systemic cyber events on a per occurrence basis
Bermudian carrier completes market's first 144A cyber bond with ‘broad investor support’ as the ILS market continues to open up to cyber risk
Bermuda-based re/insurer Axis Capital has closed the market’s first 144A cyber catastrophe bond.
The landmark $75m Long Walk transaction provides several of the company’s subsidiaries, including its Lloyd's syndicate, with two years of fully collateralised indemnity reinsurance protection for systemic cyber events on a per occurrence basis.
The transaction is further evidence of the continued opening up of the ILS market to cyber risk, following Beazley's cyber catastrophe bond issued in January.
“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,” Axis Capital’s chief financial officer, Peter Vogt, said.
Special-purpose insurer Long Walk Reinsurance issued $75m of Series 2024-1 Class A notes, maturing January 2026, to investors to support the reinsurance agreement.
The offering was structured and distributed by Aon Securities, with risk analysis provided by CyberCube. Sidney Austin acted as legal counsel on the transaction.
Richard Pennay, head of insurance-linked securities at Aon Securities, said the Long Walk deal was notable for the global cyber insurance market, adding “it received broad investor support and illustrated the catastrophe bond investors’ ability to work with Axis to pioneer a product that provides meaningful catastrophe-based cyber protection”.
“The transaction also ensures investors receive additional diversification across the catastrophe bond product spectrum, helping them to navigate potential volatility and build a resilient portfolio,” he continued.
“Significantly, this transaction marks an important milestone, whereby the catastrophe bond market is leading in the development of a catastrophe-based cyber reinsurance product.”
The Long Walk bond is the latest cyber catastrophe bond to hit the market but is the first rule 144A bond to close.
London market heavyweight Beazley launched the market’s first cyber catastrophe bond in January. The $45m bond, designed to cover remote probability catastrophic and systemic events, was a private section 4(2) bond, although it was fully tradable under rule 144A.
Other rule 144A cyber catastrophe bonds are reported to be in the market. Beazley’s PoleStar Re deal is being marketed to ILS investors, and Chubb has just launched its first cyber catastrophe bond, East Lane VII, according to Artemis.bm.
