Specialty insurer Beazley sponsored the first Cyber Insurance Catastrophe (CAT) bond recently, a new type of ILS or insurance linked security issued by a Bermuda entity. They announced the $45 million private placement on January 9, 2023. The bonds provide investors with a generous floating rate of interest and a return of principal in one year, provided that no single catastrophic event occurs across Beazley’s portfolio of cyber insurance policies that results in more than $300 million of losses. Any losses above $300 million incurred by Beazley on those policies as a result of that one event would be absorbed by the investors, up to the $45 million principal amount. The deal was marketed under an NDA, so not all of the details are available, but the bonds will not protect against losses from a state-sponsored cyberattack, which is typically excluded from cyber insurance policies as an act of war.

Locke Lord is a proud sponsor of The Insurance Forum on November 2, 2022 in Chicago. The program is offered in person and virtually. Locke Lord Partner Patrick Byrnes will moderate, and Senior Counsel Kenneth Suh and Associate Alexander Cox will serve as panelists, for “BIPA – The Familiar Face of Biometric Data Regulation.”

Locke Lord’s Privacy & Cybersecurity Newsletter provides topical snapshots of recent developments in the fast-changing world of privacy, data protection, and cyber risk management. For further information on any of the subjects covered in the newsletter, please contact one of the members of our privacy and cybersecurity team.