CyberCube model used to structure first cyber cat bond

CyberCube has acted as a modeling agent for the first private cyber cat bond to bring additional reinsurance capacity to the market.

The company’s Portfolio Manager was utilised as part of the creation of a $45m ILS transaction by Beazley. The model allows stress testing of portfolios of insurance risk so that loss drivers and areas of accumulation risk can be identified.

The deal was structured and launched by Gallagher Securities, with the project driven by Gallagher Re’s Cyber division.

Juan Marcano, principal - Cyber Alternative Risk Transfer, commented: “We are committed to continuing to develop innovative solutions to help support the cyber insurance industry moving forward.” 

More issuances to come

CyberCube has published a report forecasting the insurance market will see greater partnerships with ILS fund managers in 2023.

The research noted demand for cyber insurance has generally outstripped the supply the insurance industry has the capacity or appetite to support.

It stated the ILS cyber market is likely to see real traction in 2023 due to more sophisticated modeling, the development of industry exposure databases and an increased understanding of cyber risk across the necessary stakeholders.