HSCM, Aon offer alternative capital capacity to mitigate cyber risk

Hudson Structured Capital Management (HSCM Bermuda) has partnered with Aon to offer alternative capital capacity to protect re/insurers from systemic and catastrophic cyber events.

The first transaction, a retrocession contract on behalf of an undisclosed cedent, has already closed, offering limits of up to $70 million and protecting against increasing cyber loss aggregations on re/insurers’ balance sheets.

Insurers play a critical role in providing cover for businesses to protect their assets from cyber risk, Aon said, but the supply of traditional reinsurance cover is being challenged by demand.

The new product will enable re/insurers to rethink access to capital with a new source of capacity and protection from the capital markets.

Edouard von Herberstein, partner and chief underwriting officer of HSCM Bermuda, said: “This is a great example of insurance and ILS markets offering risk transfer solutions for intangible assets, an area of the market where we expect to see a growing number of opportunities in the years to come.”

Luke Foord-Kelcey, international head of cyber at Aon’s Reinsurance Solutions, said the product enables carriers “to navigate new forms of volatility by expanding the cyber reinsurance and retro markets to address this risk’s inherent systemic exposures."

He added: "Combined with the multi-model approach from Aon’s dedicated cyber analytics team, this has enabled us to develop a platform with HSCM that allows capital markets to participate in the fast-growing cyber sector in a manner that works for both cedents and investors and, importantly, that enables investors to fund limits previously unseen in this space.”