Cyber reinsurance and ILS ensure Beazley can respond to changing threats: CUO Bantick

Beazley’s Group Chief Underwriting Officer Paul Bantick explained this morning how the company has prepared itself to respond to the evolving cyber threat landscape, laying out the importance of its reinsurance and cyber insurance-linked securities (ILS) protection, while also providing an insight into its exposure to recent events.

With Beazley the most significant sponsor of cyber catastrophe bonds in the market so far, as well as a meaningful buyer of cyber industry-loss warranty (ILW) protection, Group CUO Paul Bantick’s comments are informative for those providing capital to these deals, in understanding how the company manages its cyber exposure.

Of the 11 cyber cat bonds tracked in the Artemis Deal Directory so far, 6 of these have been sponsored by Beazley.

Last year, Beazley raised its overall cyber excess-of-loss reinsurance and ILS protections to more than $1 billion, with new cyber cat bonds and cyber ILW’s boosting the total coverage it benefits from.

The cyber cat bond market has been relatively quiet since, with only one parametric cloud outage cyber cat bond for global reinsurance firm Hannover Re seen since.

This morning, Bantick discussed the cyber threat landscape, how it has been evolving and how Beazley’s cyber book has fared through recent systemic events during an earning’s call for the company.

These insights are valuable to the ILS investor community, given Beazley’s stature as the largest cedent of cyber exposure in cat bond and other forms backed by capital markets investors.

Bantick began by talking about the current threat landscape, “What’s clear from the high profile events recorded in the first-half is that the claims environment is far from benign in cyber. These incidents have reinforced the need for cyber insurance and the importance of maintaining rate adequacy, risk selection, discipline, and the cyber services and ecosystem that we’ve worked so hard building over recent years to protect long term profitability.

“What we’ve seen in the first half of 2025 is a different dynamic in the nature of cyber losses. In 2024 the most widely reported and picked up events were systemic in nature, large scale incidents impacting multiple insureds, such as software vulnerabilities or platform wide outages. Our exposure to these events was well managed. In contrast, in 2025, we have seen more attritional losses involving individual insurers affected by ransomware, with the data breaches.

“Another notable change is geographic. In 2025, we’ve initially seen more cyber attacks outside of North America, particularly in Europe and other international markets. This is as we predicted, and our expert Cyber Council suggested to us at the start of the year. The cyber threat can shift reasonably quickly with the geo-political environment around the world, and given some recent changes, we do anticipate it may swing back to be more focused on North America in the coming months.”

Bantick then provided some insight into how recent cyber insurance loss events have affected Beazley, as well as how its exppsure sits at this time.

“To help clarify systemic losses can trigger multiple policies and accumulate quickly, but we’ve been managing exposures for years and have a well established approach for these events. For example, if you look at the 2024 systemic events, our net loss was modest. CrowdStrike $17 million, Change Healthcare $14 million and CDK $28 million in totality, this demonstrates our ability to manage potential aggregates effectively,” Bantick explained.

Going on to say that, “Attritional losses, on the other hand, are typically one limit losses while headline while headlines may reference policies with coverage in 10s or hundreds of millions of dollars, the reality is that our net average line size is $1.7 million and even our maximum net limits are below $10 million in 99% of cases. Our attritional losses continue to perform well across the business, and this disciplined approach, combined with expertise, ensures that even in a more active claims environment, our exposures remain well managed.”

Bantick moved on to lay out the multi-layered protection Beazley has put in place for its growing cyber underwriting book, leveraging different reinsurance structures and sources of capacity.

Bantick said, “Our cyber protections are designed to respond to both systemic and attritional risks, using a layered approach that reflects the evolving threat landscape. For attritional risks, frequent lower severity events affecting single insureds, we use proportional reinsurance, which shares premium losses with our partners, helping smooth volatility, cyber aggregate stop loss, which caps the total cyber related losses over a period, protecting against cumulative attritional impacts.

“For systemic risk events, that impact multiple insured simultaneously, we deploy excess of loss cover, which protects us above a set threshold, clash reinsurance, which respond when multiple policies are triggered by a single event, cyber catastrophe bonds, which hedge extreme risk to capital markets, as well our industry loss warranties, which trigger based on market wide loss events, cyber aggregate stop loss, which also acts as a buffer against systemic accumulation and man made catastrophe loadings within our reserves, which build resilience against human driven systemic events very similar to how you would in natural catastrophe property.”

Bantick then stressed the importance of this approach to protecting and hedging against large cyber loss events, with his comments suggesting the firm sees the cyber cat bonds and other coverages as critical to its long-term cyber risk ambitions.

Bantick stated, “The systemic events described were relatively modest in impact, but it’s important to recognise that systemic events have the potential to result in higher losses, whether we’re dealing with these modest events or something approaching a 1-in-250 like scenario.

“This is a risk we’re constantly thinking about in our pricing modelling and overall portfolio management. As we already showed, we built over $1 billion in systemic cat protections in addition to other reinsurance, and will continue to do so.

“Together, these protections ensure we can respond effectively to a changing threat landscape, whether it’s a single ransomware attack or a widespread platform failure.”

There are 8 entries in our extensive Deal Directory for catastrophe bonds that Beazley has sponsored, including its PoleStar Re cyber cat bonds, its Cairney private cyber cat bonds and its Fuchsia nat cat deals.