Lloyd’s unveils first 144A catastrophe bond on London Bridge

Lloyd’s of London has announced that the first 144A catastrophe bond has been issued on its risk transformation platform London Bridge 2 PCC.

The bond, which is sponsored by insurer Beazley, will provide $100m (£78.7m) in multi-year indemnity reinsurance coverage for named storm and earthquake events affecting the US, Canada and parts of the Caribbean.

Lloyd’s noted that the transaction brings the aggregate issuance of securities to institutional investors by the London Bridge vehicles to approximately ($750m) £590.6m across 13 cells.

Burkhard Keese, Lloyd’s chief financial officer, said: “We are very pleased to see the efficient close of the first excess of loss cat bond transaction by London Bridge 2.

”This is another important milestone for this strategically important risk transformation vehicle for the Lloyd’s market and reaffirms the flexibility this vehicle has, provided by its regulatory permissions.

”We are delighted that Beazley has been the pioneer for this new issuance, which confirms our belief that the UK market, and Lloyd’s in particular, is a great place for institutional investors to gain access to global (re)insurance risk.”

Transaction details

The London Bridge risk transformation platform allows market participants to raise solvency capital to support underwriting at Lloyd’s and transfer specific risks to the capital markets as part of a syndicates’ risk management strategy.

It was sponsored by Lloyd’s as part of its Future at Lloyd’s strategy, which envisions a data-focused, automated and cost-efficient insurance marketplace.

Beazley sponsored the latest transaction on behalf of its Lloyd’s syndicates – 623, 2623 and 3623 – its North American insurance company and European carrier.

Adrian Cox, chief executive of Beazley, said: “Beazley is delighted to be sponsoring the first 144A property catastrophe bond utilising the London Bridge platform.

”We were impressed with the smooth and efficient way that an insurance-linked securities (ILS) transaction can be issued out of the UK market and we are grateful for the support received from Lloyd’s and Artex throughout the process.”

Aon Securities LLC was the sole structuring and book building agent and Mayer Brown acted as deal counsel for the transaction.

Richard Pennay, ILS chief executive of Aon Securities, said: “We are proud to have acted as sole structuring agent and bookrunner on not only the inaugural excess of loss catastrophe bond by London Bridge 2 but importantly Beazley’s first property catastrophe bond transaction.

”From a transaction timeline perspective the use of the UK PCC allowed for a seamless and efficient execution timeline and was well received by the investor community.”

• Insurance Times has converted dollar amounts into pounds using an exchange rate of $1.27 = £1, which was correct as of 1 January 2024.