While loss multiples across recent cyber catastrophe bonds have trended lower, rating agency AM Best suggests that while the novelty premium ascribed to earlier issuances is reducing, it stresses that such a premium has not gone away entirely.
The rating agency recently published a new report on catastrophe bonds and insurance-linked securities (ILS), which also examined the recent movement that’s been seen across the expanding cyber ILS market.
AM Best highlighted how capacity in the 144A cyber cat bond space grew to $1.235 billion at year-end 2025, a sharp increase from $785 million at year-end 2024, with both Beazley and Chubb returning to the market with additional issuances.
“Beazley’s PoleStar Re Ltd. (Series 2026-1) is the largest issuance to date at USD 300 million, divided across three tranches. The latest issuance by Chubb, the USD 150 million East Lane Re VII Ltd. (Series 2026-1), has the distinction of being the first aggregate 144A cyber cat bond,” AM Best explained.
As we’ve explained before, Chubb’s second cyber catastrophe bond sponsorship broke new ground in the catastrophe bond market, as it introduced a level of diversification into cyber ILS that has not existed in 144A cat bond format before.
Chubb managed to secure the coverage at attractive pricing and has potentially opened up the cat bond market to more issuances in aggregate protection formats.
However, AM Best emphasises that for the most recent issuances from both Beazley and Chubb, the loss multiples have decreased since the last issuances from each firm.
“The loss multiples across the three tranches of Beazley’s most recent issuance range from 5.1 to 8.5, which is down from the two tranches issued in 2024, which had loss multiples ranging from 10.5 to 11.3. Similarly, the loss multiple on Chubb’s most recent issuance was 5.4, down from 6.7 in 2024; although, the two issuances are slightly less comparable given that the more recent issuance provides coverage on an aggregate basis. All else equal, one might have expected the aggregate coverage to carry a higher loss multiple,” AM Best explained.
Adding: “Based on the reduction in loss multiples, there may be evidence of a reduction in the novelty premium that was ascribed to earlier issuances, but it is not clear that such a novelty premium has completely gone away.”
Furthermore, the agency emphasised that that 144A cyber cat bond loss multiples are still notably higher than the 2025 weighted average loss multiple of 2.97 in the property cat bond market.
However, AM Best also indicated that the decrease in loss multiples may be less due to the lack of a novelty premium and more related to the initiatives taken by these sponsors to inform investors about their cyber insurance portfolios and their openness regarding modeling, pricing, and exposure management.
The agency also noted that new sponsors within the cyber cat bond market could potentially see different outcomes.
“Abundant capacity in the primary and reinsurance markets, along with muted demand for coverage, suggests that cyber-ILS growth will be modest for now. Cyber insurance has low uptake, partly because it is not mandatory coverage and likely also because insureds may not have a full understanding of their exposure to cyber risk,” AM Best added.
“However, pioneers are enthusiastic about the long-term potential for cyber-ILS and seem inclined to nurture this market in its infancy.”
See details of every cyber catastrophe bond ever issued in the Artemis Deal Directory.
