AXIS announces closure of first 144a cyber cat bond
AXIS Capital Holdings has closed the market’s first 144A cyber catastrophe bond, a $75 million transaction providing several of the company’s subsidiaries with fully collateralised indemnity reinsurance protection for systemic cyber events on a per occurrence basis.
Long Walk Reinsurance issued $75 million of Series 2024-1 Class A notes, maturing January 2026, to investors to support the reinsurance agreement with the Company. The notes were listed on the Bermuda Stock Exchange yesterday.
“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,” said Peter Vogt, chief financial officer at AXIS.
“Together with our partners Aon Securities, CyberCube and Sidley Austin, AXIS is proud that the ILS investor community has shown tremendous confidence in and acceptance of Long Walk, the first 144A cyber catastrophe bond, and our cyber underwriting capabilities.
“We expect Long Walk to provide meaningful support for the growth of our cyber insurance portfolio in the future. More broadly, we expect this transaction will serve as a template that the catastrophe bond market will use to support the availability of cyber insurance capacity in the years to come.”
AXIS said the Long Walk catastrophe bond transaction was structured and distributed to investors by Aon Securities. The expertised risk analysis was provided by CyberCube’s portfolio manager platform. Sidley Austin served as the deal counsel on the transaction.
144A catastrophe bonds are more liquid forms of bonds than those raised solely through private placements, meaning they are easier to trade.
Richard Pennay, CEO of Insurance-Linked Securities at Aon Securities, said: “This is a notable catastrophe bond transaction, not just for the insurance-linked securities market, but also for the global cyber insurance market. 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. Significantly, this transaction marks an important milestone, whereby the catastrophe bond market is leading in the development of a catastrophe-based cyber reinsurance product.
“There is strong insurer demand for the further development of this non-proportional product, and we commend AXIS Capital’s leadership in developing the catastrophe bond capacity.”
Pascal Millaire, CyberCube CEO, said: “We are proud to have supported AXIS in the world's first cyber 144A cat bond. AXIS, Aon Securities, Sidley Austin and CyberCube worked incredibly hard as a team on the development of a new chapter for the ILS market. We are very pleased to be part of this groundbreaking transaction.
“This deal highlights the confidence shown by the market in portfolio manager and the team at CyberCube. We believe this lays a foundation for the growth of cyber as an alternative asset class for ILS investors.”
Long Walk Reinsurance is a Bermuda exempted company and registered as a special purpose insurer. This is the first issuance of notes for Long Walk Reinsurance covering the AXIS insurance and reinsurance companies, including its Lloyd’s syndicate.
Earlier this year, Beazley announced a $45 million private Section 4(2) bond is fully tradeable under Rule 144A resale and gives Beazley indemnity against all perils in excess of a $300 million catastrophe event, with the potential for additional tranches to be released through 2023 and beyond.
Since then, both Beazley and Chubb have been reported to have launched 144A cyber catastrophe bonds.