Pool Re completes £2.4 billion terrorism retrocession placement
Pool Re, Britain’s leading terrorism reinsurer, has completed placement of its £2.4 billion retrocession programme with more than 50 international reinsurers, led by Munich Re with Hannover Re also providing a significant part of the coverage.
The retrocession is structured as an aggregate excess of loss treaty which will attach if Pool Re’s losses, individually or in aggregate, exceed £400 million in any year, after member insurers’ combined retention of £250 million per event or £410 million in aggregate. The £2.4 billion is an increase from £2.3 billion in 2018 and includes £75 million provided under Pool Re’s ground-breaking terrorism catastrophe bond, which was launched last year.
Reflecting the underlying insurance provided by Pool Re through its member insurers, the retrocession covers property damage arising from nuclear, biological, chemical, and radiological attacks; those arising from cyber-triggered terrorist losses; as well as conventional terrorist acts.
Steve Coates, Pool Re’s chief underwriting officer, said: “For the second year in a row, this risk was modelled using Pool Re’s own model, developed in collaboration with Cranfield University and Guy Carpenter. It deploys Computational Fluid Dynamics to assess blast risk which considers how blasts move over, around and between buildings. With this continuing improvement in our modelling, we have been able to see changes in the exceedance curve, which led to the creation of a new £100m layer in order to reduce the attachment point to £400 million.”
James Nash, CEO of Guy Carpenter’s international division, commented: “Pool Re has once again been successful in sourcing new capacity from reinsurers in a challenging market whilst maintaining their core relationships. This demonstrates the wide support Pool Re that is able to achieve with their proactive and foresighted approach to the peril, coverage and technical expertise. This is an excellent result that Guy Carpenter is delighted to have brokered for them.”
Julian Enoizi, Pool Re chief executive, said: “We are pleased to have finalised this extended retrocession placement, one of the largest reinsurance deals in the world. As Pool Re continues to return UK terrorism risk to commercial markets, this programme is a core part of our strategy of further distancing the taxpayer from potential loss.”
Authored by Pool Re
Pool Re’s purpose is to enable the UK insurance market to offer terrorism cover to any commercial property that requires it. Central to this is the integration of Pool Re’s cover with the underlying property policy which ensures that there is no gap in the cover provided.
Pool Re was designed to insulate the taxpayer from potential financial losses arising from acts of terrorism. It has achieved this effectively, to date paying £635m in respect of 13 claims arising from certified terrorism events in the UK since our establishment. It has never called on the Government’s guarantee.
By providing foundational stability at a reinsurance level, Pool Re has created an environment for the commercial market to re-establish itself, following the market failure in 1992. This stability creates and sustains access, liquidity and confidence to generate the conditions for the private market to gradually write a growing portion of terrorism risk.
Helping UK businesses build resilience against terrorism risk is a priority for Pool Re who have developed SOLUTIONS an in-house centre of excellence created to support Members and policyholders better understand risk awareness, modelling, and management. They have also invested in a range of initiatives with Government security and intelligence agencies to provide tools such as an information sharing platform.
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