Beazley has returned to the catastrophe bond market seeking $100 million of natural catastrophe reinsurance, once again using the Lloyd’s owned ILS structure to issue this London Bridge 2 PCC Limited (Fuchsia 3 – 2025-1) deal.
The London headquartered specialty insurance and reinsurance underwriter is also in the market with its latest cyber catastrophe bond at the same time, the fourth under PoleStar Re, as we reported earlier this week.
This will be Beazley’s seventh 144A catastrophe bond issuance, as the company continues to demonstrate its appetite to leverage the capital markets to source efficient reinsurance for its peak exposures, both natural catastrophe and specialty lines related.
For its third catastrophe bond covering natural perils, Beazley is again using the Lloyd’s insurance-linked securities (ILS) structure London Bridge 2 PCC Limited, as a structure to issue the notes and connect the capital from investors to its business via reinsurance agreements.
This Fuchsia 3 cat bond will become the fifth issued by London Bridge 2 PCC, as the structure has also been used by Flood Re and Brit in the last year.
Beazley secured $100 million in natural catastrophe reinsurance from its first ever Rule 144A property catastrophe bond, the Fuchsia 2023-1 issuance in December 2023, then secured a further $200 million through the Fuchsia 2 – 2024-1 deal in December 2024.
So, it’s encouraging to see Beazley back to layer another multi-year cat bond into its property catastrophe reinsurance arrangements with this third Fuchsia cat bond deal.
London Bridge 2 PCC Limited is offering investors a single, currently targeted at $100 million, tranche of Series 2025-1 notes via a protected cell named Fuchsia 3, sources told us.
The Fuchsia 3 Series 2025-1 notes will be sold to cat bond investors and the proceeds be used to collateralize a reinsurance agreement between the Fuchsia 3 protected cell of London Bridge 2 PCC and Beazley, affording the company a source of multi-year international property catastrophe reinsurance protection.
Just like the first two property cat bonds from Beazley, we are told this third Fuchsia issuance will again provide it reinsurance for losses from named storm and earthquake events that impact the United States, Canada and certain parts of the Caribbean.
Again like the first two property cat bonds, this new Fuchsia 3 will also provide reinsurance that will benefit all of Beazley’s core underwriting entities, including its syndicates at Lloyd’s, its US E&S insurer and Irish insurer.
The targeted $100 million or more in coverage from the Fuchsia 3 2025-1 cat bond notes will provide Beazley with reinsurance across a more than three year term, running from January 2026 to the end of March 2029, which is aligned with the previous Fuchsia deal maturity scheduling we understand.
The notes issued will provide Beazley with indemnity trigger and per-occurrence based reinsurance that would attach at $900 million of losses to Beazley and cover a share up to exhaustion at $1.2 billion, we understand.
Which makes them slightly more remote in risk terms than the previous fuchsia cat bonds, as the first initially covered losses from an attachment of $500 million and the second from $800 million.
The currently $100 million of Fuchsia 3 2025-1 cat bond notes that London Bridge 2 PCC is set to issue come with an initial attachment probability of 1.37%, an initial expected loss of 0.93% and the notes are being offered to investors with spread price guidance in a range from 3.75% to 4.5%, sources told us.
That pricing is commensurately lower than the previous deals, as you’d expect given the softening of catastrophe reinsurance rates and cat bond spread tightening.
You can read all about this London Bridge 2 PCC Limited (Fuchsia 3 – 2025-1) catastrophe bond transaction in our Deal Directory, where you can analyse details of almost every cat bond ever issued.
