Swiss Re, Gallagher Re launch cyber retro ILW in market first

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 $50m of catastrophic US cyber insurance event protection, including cover against widespread malicious ransomware or malware, prolonged catastrophic cloud outage and systemic data breach.

Swiss Re’s purchase of cyber market’s first Retro ILW comes after a strong year for the catastrophe bond market in 2023.

Cyber has been talked about as the next big thing for catastrophe bonds and the insurance linked securities (ILS) market.

“Accessing alternative external sources of cyber capacity to support our inwards cyber business has been a key priority for us,” said Nick Meuli, head of property and casualty capacity management, Swiss Re.

“We are very pleased to have secured significant ILW protection which provides yet another novel and complementary cover for our cyber portfolio,” Meuli said.

The news follows the recent 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, the broker noted, and achieved an 87% upsize in marketing to $140m.

“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,” said Ian Newman, global head of cyber, Gallagher Re.

“We are proud to have delivered another market first on behalf of Swiss Re, a true market leader in this space,” Newman said.

Theo Norris, head of cyber ILS, Gallagher Re, added: “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.”