Cyber
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State interference is likely to be required if an attack is large enough to trigger bonds now on the market, experts say.
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The consortium will offer up to $50mn of per-program capacity.
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The ILS market’s exposure could grow to $1.5bn by the time a major cyber cat event occurs.
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The reinsurer said it hopes to grow the size of the $13.75mn deal over time.
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Stefan Sperlich will lead the new unit as managing director.
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Revenue, country and industry sector drive modelled output divergence.
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Some $415mn of capacity entered the market last year.
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The client lacked options in the conventional insurance market.
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Envelop SPA 1925 was launched at the start of the year with Chris Baddeley as active underwriter, based in London.
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The $50mn bond provides coverage against systemic cyber events in the US and District of Columbia.
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George Mawdsley joins after more than 10 years at Securis, where he was tasked with structuring and origination of ILS risk.
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The carrier has also extended the redemption period by three years, to 31 March 2029.
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The transaction is the second cyber cat bond in 144A format to price and follows Axis’s Long Walk Re deal in November.
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The 144A cyber cat bond deal has increased in size from an initial target of $75mn.
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The year brought a degree of closure on the loss-hit years of 2017-2021, while the outlook remains changeable for ILS managers.
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Chubb’s East Lane Re bond is the third cyber cat bond in 144A form to enter the market.
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The $75mn Long Walk Re deal secured broad market support from ILS investors.
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The $75mn cat bond will cover systemic cyber events on a per-occurrence basis.
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The $75mn cat bond is expected to close in late November.
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Sources have raised concerns that cedant demand could outpace available capacity for cyber cat bonds.
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Executives said geopolitical uncertainty, economic stagnation, cyber, cat events and inflation will drive demand on the Continent.
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The US could be exposed to economic losses of $1.1tn in the event of a cyberattack, the highest of any country.
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Cyber reinsurance has around $500mn of annual capacity currently supporting the space.
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A number of players suggested that the cost components of first-party claims were up between 30%-50% on that seen during Ransomware Wave One.
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Experts at the Trading Risk New York conference emphasised in-built cyber risk protections from defences to exclusions, as ILS managers grapple with understanding the peril.
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The founding members include Munich Re, Gallagher Re, and BitSight.
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The carrier describes reinsurers’ current strategy of dealing with cyber policies as "a game of whack-a-mole"
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The broker studied the impact of 14 major cyber events in its attempt to dispel ILS manager fears of a ‘double whammy’ cyber event that would also impact financial markets.
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The new SPA will write cyber reinsurance initially and could progress to writing insurance.
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The cyber MGA can now serve clients in Italy, Spain, Ireland, Sweden and Denmark.
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A Guy Carpenter report recently noted that risk models are converging for the most remote risk levels.
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The broker named Matthew McCabe as MD of cyber broking with a brief to tackle complex cyber issues.
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New language has been introduced by some insurers to limit exposures to cyber risks.
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Analysis showed a modelled loss range of between $15.6bn and $33.4bn for a 1:200-year global loss event.
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In a discussion at Trading Risk’s London ILS 2023 conference, panellists compared the current cyber ILS market to the cat market in the 1990s.
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