Hannover Reinsurance SE said on Thursday it has bought $100 million in retrocessional reinsurance for cyber exposures through a proportional reinsurance agreement with a capital markets provider.
The coverage, which is placed with funds managed by New York-based Stone Ridge Asset Management LLC, supports Hannover Re’s worldwide cyber portfolio, the Hanover, Germany-based reinsurer said in a statement.
“For the first time, we were able to transfer cyber risks to the capital markets, and on a large scale, through a proportional reinsurance solution,” says Silke Sehm, member of the reinsurance company’s board.
Retrocession protection provides reinsurers with reinsurance for their own portfolios.
Hannover Re is the world̵7;s third largest reinsurer and a long-standing participant in the market for insurance-related securities. Historically, capital markets participating in the reinsurance market have focused on property catastrophe risks and life reinsurance.
In the statement, Ross Stevens, CEO of Stone Ridge, said the company expects higher than average investment returns from cyber insurance investments and low correlation with other investment risks.
“We intend to meaningfully increase our cyber exposure in 2023 and beyond,” he said.
Earlier this month, Beazley PLC announced that it had purchased a catastrophe bond offering $45 million in cyber risk coverage.