Swiss Re Buys Cyber Market’s 1st Retrocession ILW, Brokered by Gallagher Re
Swiss Re has purchased the cyber market’s first retrocession industry loss warranty (ILW), brokered by Gallagher Re and supported by a number of specialist reinsurers.
Swiss Re secured $50 million of catastrophic US cyber insurance event protection, including cover against widespread malicious ransomware or malware, prolonged catastrophic cloud outage and systemic data breach.
“Accessing alternative external sources of cyber capacity to support our inwards cyber business has been a key priority for us. We are very pleased to have secured significant ILW protection which provides yet another novel and complementary cover for our cyber portfolio,” commented Nick Meuli, head of P&C Capacity Management at Swiss Re.
“Alongside traditional retro and cat bond solutions, we believe ILWs and parametric solutions will form a critical part of the cyber value chain in the coming years. We are proud to have delivered another market first on behalf of Swiss Re, a true market leader in this space,” according to Ian Newman, global head of Cyber at Gallagher Re. (Editor’s note: An ILW is a reinsurance or derivative contract that pays out when the financial losses experienced by an industry exceed a specified threshold, according to Investopedia.)
Swiss Re’s purchase of cyber market’s first Retro ILW comes after years of work in the field and reflects a market which is growing in confidence, said Gallagher Re, noting that the cyber cat bond market also continues to grow.
“Successfully executing this innovative solution for Swiss Re is another step forward in broadening the potential access for capital to enter the cyber insurance space and to provide effective, alternative solutions for insurers and reinsurers alike,” said Theo Norris, head of Cyber ILS at Gallagher Re.
This announcement follows the December launch of one of the first underwritten rule-144A cyber catastrophe bonds, PoleStar Re. The trade was structured and placed by Gallagher Securities, with expertise provided by the Gallagher Re Cyber team and achieved an 87% upsize in marketing to $140 million.
Source: Gallagher Re