Axis Capital, a re/insurer based in Bermuda, has successfully closed the market’s first 144A cyber catastrophe bond.
The Long Walk transaction, valued at $75m, is a landmark deal that 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.
This transaction is a testament to the increasing openness of the ILS market to cyber risk, following Beazley’s cyber catastrophe bond issued in January.
According to Axis Capital’s chief financial officer, Peter Vogt, “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.”
To support the reinsurance agreement, special-purpose insurer Long Walk Reinsurance issued $75m of Series 2024-1 Class A notes, maturing January 2026, to investors.
Aon Securities structured and distributed the offering, with risk analysis provided by CyberCube, and Sidney Austin acted as legal counsel on the transaction.
Richard Pennay, head of insurance-linked securities at Aon Securities, noted that the Long Walk deal 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.
He also added, “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.”
Additionally, he mentioned, “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.
Beazley launched the market’s first cyber catastrophe bond in January, covering remote probability catastrophic and systemic events, although it was fully tradable under rule 144A.
Other rule 144A cyber catastrophe bonds are reported to be in the market, with Beazley’s PoleStar Re deal being marketed to ILS investors and Chubb launching its first cyber catastrophe bond, East Lane VII, according to Artemis.bm.