Cumulus Re cat bond listed on BSX

The Bermuda Stock Exchange has confirmed the listing of Cumulus Re, the first of a kind catastrophe bond that covers losses from sustained cloud outage risk. 

The $13.75 million Principal At-Risk Zero Coupon Notes due April 14, 2025 were issued by Kaith Re, owned by Hannover Re, which partnered with cyber MGA Parametrix to issue the bonds. 

The listing, which took place on April 23, protects the reinsurer against cloud outage loss accumulation within its large cyber reinsurance portfolio.

Bermuda:Re+ILS's sister publication Intelligent Insurer reported that the issue provides Hannover Re with incremental retrocession protection should the delivery of specific cloud services in certain US cloud regions by one or more named cloud service providers are interrupted in excess of a specified waiting period.

Parametrix acts as modeling and calculation agent on the annual bonds. The privately issued, parametric, Reg 4(a)(2) “cat bond lite” has been placed with multiple investors and begins to meet the rapidly growing demand for this type of reinsurance coverage, the company said. 

Parametrix created the cloud model based on historical cloud outage data, collected by the Parametrix Cloud Monitoring System (PCMS).

“Businesses are increasingly reliant on cloud services for storage and computing power, which has driven exposure to cloud outage” said Henning Ludolphs, Managing Director, Retrocession and Capital Markets at Hannover Re. “Cloud outage can lead to significant business interruption losses for the insured, and subsequently for the (re)insurance market. Therefore, we are very pleased to have arranged a parametric cloud outage cover in bond format in cooperation with Parametrix.

“Cloud outage is one of the main risks within cyber (re)insurance and the involvement of capital markets is crucial to satisfy capacity needs in the mid- to long-term. This cover is a first step towards getting investors involved, and we envisage to grow the cover over time together with our investors.”

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