Parametrix has announced the structuring and placement of Cumulus Re II, its second cloud-outage catastrophe bond.
The bond, larger than its predecessor, has attracted increased investor participation, offering Hannover Re US$20 million in retrocessional coverage for potential aggregated losses stemming from sustained cloud-outage events during the 2025-2026 period.
Parametrix says that it has compiled data from over 2,600 historical cloud-outage incidents and more than 260 billion performance and availability data points. This extensive dataset offers insights into the reliability of major public cloud providers Amazon Web Services, Microsoft Azure, and Google Cloud Platform.
The first bond, Cumulus Re, issued previously, was not triggered in its initial year. Sponsored in April last year, it was worth $13.75 million and was issued by Hannover Re’s wholly owned Bermuda-based reinsurer Kaith Re as a specialized “cat bond lite” for cloud outage risks.
To establish pricing and structure for the Cumulus Re II bond, Parametrix Analytics, the analytical division of Parametrix, used its historical data to assess the underlying risk portfolio held by Hannover Re.
Parametrix Analytics will also serve as the calculation agent for the bond. This year, bondholders will gain exclusive access to a specialized dashboard providing real-time monitoring of cloud regions, which will improve transparency and aid investors in tracking the emerging risk.
"We have shown again that portfolio accumulation of cloud outage losses is a risk that can be tamed,” said Sharon Haran (pictured above), managing director of Parametrix Analytics.
In recent years, the cloud computing landscape experienced significant disruptions, underscoring the critical importance of cloud services across various industries.
The previous year saw three notable incidents that underscored the importance of these solutions: the CrowdStrike incident and Microsoft Azure outage, both in July, and a separate Google Cloud incident in May.
Critical cloud service disruptions among the top three public cloud providers rose by 18% in 2024, with the duration of these outages increasing by 18.7% compared to the previous year. This uptick in both frequency and duration of outages has led to increased financial losses across sectors heavily reliant on cloud services.
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