Speaking earlier today during Beazley’s earnings call for its Q4’24 results, Chief Executive Officer (CEO), Adrian Cox, revealed that the London headquartered specialty insurance and reinsurance underwriter, plans to sponsor more cyber catastrophe bonds in 2025 as it continues to grow.
Beazley sponsored its first 144A cyber cat bond in December 2023, securing the $140 million PoleStar Re 2024-1 deal.
This was then followed up with a $160 million PoleStar Re Ltd. (Series 2024-2) issuance in May 2024.
Then, in September 2024, Beazley once again returned to the cat bond market, as it secured its third 144A cyber catastrophe bond sponsorship, the $210 million PoleStar Re Ltd. (Series 2024-3) issuance.
During today’s call, while answering a question regarding Beazley’s solvency ratio and how it seems that the firm’s solvency sensitivity to the tail risk in cyber had modestly reduced at FY24, compared to H1’24, Cox commented on whether this reflects the cat bond issued by Beazley, and whether the company plans to issue more cat bonds in 2025.
“So, yes, the cyber cat bond has helped. I think we will look to do more of that as we grow. I think it’s a very useful tool for us, he said.
Cox also commented further on Beazley’s success across the cyber cat bond market.
“Developing an effective market for cyber catastrophe reinsurance is vital if we are to create a cyber insurance market capable of meeting demand from business. Having launched the market’s first cyber catastrophe bond in 2023, we followed this with a further bond at the start of this year. With three tranches issued during the course of 2024, cyber catastrophe bonds now provide $510m of cover,” Cox commented.
He continued: “In October 2024, we issued the market’s largest and first cyber industry loss warranty (ILW), providing $290m of cover should industry losses exceed $9bn. Together with traditional reinsurance, we have $1bn of cyber catastrophe reinsurance in place, providing powerful protection for our business and demonstrating the innovation needed to drive this market forward.”
Paul Bantick, Group Chief Underwriting Officer (CUO), also explained that cyber risks retained its leadership role in the global cyber insurance market in 2024, with the creation of new cyber reinsurance capacity, in the form of additional catastrophe bonds and the launch of the market’s largest cyber ILW.
“These innovations, together with our probabilistic modelling approach for cyber, ensure that Beazley has strong protection across its cyber business,” he added.
In its results for the full-year 2024, Beazley reported record profit before tax of $1.423 billion, up 13% on the prior year’s $1.254 billion, as insurance written premiums rose 10% year-on-year to $6.164 million on the back of growth in the majority of the firm’s divisions.
“The alignment in gross and net growth follows an increase in reinsurance spend in the second half of the year, following an opportunity identified to further manage our cyber catastrophe exposure by placing additional cyber catastrophe bonds as well as an ILW,” Beazley commented.
“We are committed to actively encouraging the development of the alternative risk transfer market for cyber, which will support the structural growth expected in the cyber insurance market in the coming years.”
Switching over to third-party capital, for FY24, Beazley reported $11.3 million in managing agent fees from its syndicates backed by third-party investors, $68.3 million of profit commissions generated from these underwriting entities at Lloyd’s and $9.4 million of other income from those syndicates as well, which clearly demonstrates how the third-party capital strategy is driving income for Beazley.
