Markets/Coverages: Lloyd’s Announces 1st 144A Cat Bond on Its London Bridge Platform

Lloyd’s, the re/insurance marketplace, announced that the first 144A catastrophe bond has been issued on its risk transformation platform London Bridge 2 PCC Ltd.

Beazley is the sponsor of the US$100 million transaction, on behalf of its Lloyd’s syndicates (623, 2623 and 3623), its North American insurance company (Beazley Excess and Surplus Inc.) and European carrier (Beazley Insurance DAC).

The indemnity reinsurance coverage provides multi-year protection for named storm and earthquake events affecting the United States, Canada and parts of the Caribbean.

The transaction brings the aggregate issuance of securities to institutional investors by the London Bridge vehicles to approximately US$750 million, across 13 cells.

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

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

“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,” he added.

Adrian Cox, CEO of Beazley plc, 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 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.” (Lloyd’s explained that London Bridge 2 PCC Ltd.’s insurance management services are provided by Artex, which specializes in the management of insurance linked securities’ vehicles.)

“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,” according to Richard Pennay, CEO ILS of Aon Securities. “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.”

Lloyd’s said the London Bridge risk transformation platform is an efficient way for market participants to either (a) raise solvency capital to support underwriting at Lloyd’s and/or (b) transfer specific risks to the capital markets as part of a Lloyd’s syndicates’ risk management strategy.

Using the UK’s Protected Cell Company (PCC) legislation, Lloyd’s sponsored the creation of an independently owned and managed UK protected cell company (PCC), London Bridge Risk PCC Ltd., in January 2021.

Source: Lloyd’s

Topics Catastrophe Excess Surplus New Markets London Lloyd's